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Using a fork, mash 1 cup of the watermelon in a wide, shallow dish until all juices are released. Stir in 1 tablespoon of the vinegar, oil, 1/4 teaspoon salt and 1/8 teaspoon pepper to make a marinade. Add halibut, turn to coat, cover, and refrigerate for 30 minutes to 1 hour.
Prepare a grill for moderate heat cooking. Toss together remaining 1 cup watermelon, remaining 1 tablespoon vinegar, green onions, cayenne, and remaining salt and pepper to make a salsa. Set aside.
Grill halibut until cooked through, about 4 to 5 minutes per side, depending on the thickness. Transfer fish to a serving platter and top with salsa. Serve immediately.