I mooted the idea (Discord link) to help in the creation of predefined setups, for which the <observer> mode is primarily used by some modules (any Predefined setup should normally be saved from <observer> role, so this change avoids unnecessary side switching). You can see an example of this in the development C&C Nap module, recently announced.
The key is that this is only allowed if no Sides are taken. Once a Side is taken, Scenario Options should be locked against observers as you require. This means that the time-window for <observer> to amend Scenario Options should be limited to when a game is not yet joined to by a player role and that is largely under control of the person who creates the game.