QM doesn’t say the “observer” has to be conscious, or even alive for that matter. Anything that interacts with the system is an observer: be it a sheet you’re firing particles against, an electronic sensor or anything else. All QM really says is that quantum state is unknown and not fixed until you interact with it.

But then the observer might get entangled with the system, and then the observer is in an unknown state

Who is observing the observer?

What, not who.

> then the observer is in an unknown state

So?

> Who is observing the observer?

No “who”, but anything that interacts with it.

Things happen whether or not you’re around to see them. Things interacted millions of years ago and they will continue to interact until the heat death of the universe. The tree falls in the woods regardless of if anybody is there to witness it. No credible peer-reviewed research has ever claimed that the observer is anything more than a physical process or interaction. It’s the quantum consciousness woo woo pseudoscientists who anthropomorphise “observer” to mean a conscious observer.

https://en.m.wikipedia.org/wiki/Observer_(quantum_physics)