Class 1 walk-up and a great side-trip if you are backpacking on the Sawtooths. Definitely worth it! Hiked up again from Stanley Lake in Oct 2012 (16.6 miles round-trip). Views were hazy from wild fires still smoldering, but weather was beautiful after a cold start.
I've hiked up Observation Peak twice. The first was on July 12, 2002 as a day hike from Stanley Lake trailhead. The second was on September 4, 2005 during a backpacking loop in the Sawtooths.