In one of the early updates, they fixed the issue with observers causing a clock when a piston extended. In 1.2.13 they changed again from only detecting the extension of the piston to detecting both extentuon and retracting. This has broke many farms built with observers. What is the point of observers if the won't properly work with pistons. I realize Java is different but observers are a Java feature and should work as it does in Java.
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As this issue has gone ignored or "works as intended" It can be closed.