Following up here on some of the feedback - After some thinking I believe the naming is a bit odd as Observed and Observations is a decent alternative that I think is acceptable.
Additionally there is a behavioral tweak that should be added to avoid sequences that will never have a value produced; the change is somewhat subtile - but it alters the initial value production rule to apply to all creation of iterators. This means that if two iterations would be created before a value is produced then they both would fetch the initial value. Practically speaking this is the "pump priming" behavior now applied as a started-or-not per iterator. This ensures that any sequence that is fetched will always start from an isolated value from the closure and then observe subsequent values changed from that closure. That does not change the expected convergence to an eventual consistency that currently exists in the proposal but starts everything off on an equal footing no matter if it is one iterator or not. This however does have a potential impact if there were additional side effects from calling that closure.
The proposal was updated for both of these changes and additional section was added to the example behaviors to illustrate an exaggerated case of where there may have been an issue in the past but now is consistent with expectations.