What do you mean by "alternate Observer"? If you mean a second one I don't believe that is possible.
I would ask the vendor what business need is for this. What many business people might not take into account is the time to recover from a failover vs the downtime. Depending upon the business a 2 minute outage is often less painful than fixing the mess created by a failover when it is not needed or a switchover would work.
Sounds like RAC is your friend.
I had a call with the software vendor today. They were not even aware of this problem and had never tested the scenario of losing both the observer and standby database at the same time. They had some Oracle-knowledgeable person write them some install instructions at one time, and one time only, and cemented those instructions into permanent stone policy without having fundamental understanding of how the system actually works. The FastStartFailoverPmyShutdown parameter is merely set to true as an Oracle default, so they left it in place as such. I will be setting it to false so my primary database will not be shutting itself off if it gets stranded on the network by itself.
Now why Oracle made this parameter default to true, is quite unfathomable to me, and is a different discussion for a different time and place.