Given that a single observe is still a net gain of CP when used inside CZ (two observes break even), it seems like it could be handy in situations where you have an awkward number of CZ steps left, and need to stall for time before proceeding to the next phase.

The most common scenario would be ending a MaMa phase with, say, 2 CZ steps left. If it was just 1, you would just stall with Inner Quiet and then reapply CZ cleanly before doing SH2 or WN2 or whatever else you plan to do in the next phase. If you were at 2 CZ steps it could be awkward as you'd have to choose between having the next CZ cast eat into a step of another valuable buff, or delay it to the next clean break in the rotation which could be quite far down the line (and potentially cost you a CZ use entirely over the course of the craft). Perhaps now you'll be able to utilize observe as an extra stall utility to smooth out weird CZ transitions like this.