As you state, a kinetic watch runs on the electricity generated by the movement of the wearer's wrist. However, a watch that stopped working as soon as the wearer stopped moving his arm about wouldn't be of much use ;-)
That means that a way of storing the electricity is required. So, the electricity generated by movement isn't used directly to power the watch. Instead, it's used to charge a battery, which then provides the power to run the watch. (i.e. a rechargeable battery is an essential component in a kinetic watch).
The dictionary definition of 'chronograph' is an 'instrument recording time with extreme accuracy' or a 'stop-watch'. In practice, watch companies usually use the term 'chronograph' to mean a watch which has got several small auxiliary dials incorporated into the face of the watch, possibly including a stop-watch function. (Most people buy these watches because they like the 'military' look that they have, rather than because they'll ever use those small dials).
This watch is a 'chronograph' (because of those extra dials). It also happens to be kinetic but it would still be a chronograph even it was a 'wind-up' watch:
http://www.seiko.co.uk/html/collectionhomepage .php?collection=1&product_id=30&brand=1&produc ttype_id=1&pricerange=&findtype=search&searcht erm=kinetic
Chris