Go to Rolex's website and they have some good info on thier process. Yes they are mass produced but to a very high standard with precision machenery. I do believe that the movement is mostly hand assembled and put through lots of tests.
Rolex's aim is not to produce the finest hand made watch, it is to produce the finest watch period. They do this by using the best of both worlds. Some steps in production like case creation and polishing are done almost entirely by machine. Some steps that still require the human touch (amazingly enough like extremely delicate hair spring winding) are done by hand. Final assembly is done with a mixture of both.
I think it is truthful to say the Rolex still must use hands in the assembly of every watch, but for those steps where machine do a better job they are leveraged.
There has been a lot of chatter on this and people are quick to point out that no Rolex is 100% hand made. Personally, I see this as fine. There are many, many things where the qualities of a machine such as precision and consistency are a better fit. Other things still require a human eye. It is my believe that a fully handmade watch of Rolex's fit and finish would be cost prohibitive for all but the world's most affluent watch enthusiasts. For the rest of us, thank goodness Rolex is looking out for us and using the best tool for the job.