refactor: deprecate observer output

[kruskall]

Problem Description

Some downstream clients currently rely on the legacy logp.Observer output for logging.

Impact

Using the deprecated logp.Observer makes tests harder to read, introduces noise, and ties them to an output mechanism that may be removed in future releases. This can obscure test failures and increase maintenance effort.

Suggested Solution

Migrate all tests to use the testinglogger provided by the testing framework. Replace any logp.Observer usage with testinglogger calls, ensuring logs are captured in the standard test output and aligned with the supported logging path.