What do you mean "good, bad, utilitarian"? Good and bad are descriptions we attach to causal causes which lead to outcomes with higher (good) or lower (bad) utility.

Having either my friend have dust in his eye or some stranger tortured are outcomes with less utility in my book than the counterfactual default. Actions which lead to these outcomes are bad, actions which prevent or provide restitution are good.

I don't know what you are getting at with a recursive relationship between observers and observed systems.