If we stick to the rules, then only tail/engine damages are inverted when direct front/rear shots occur.
The rules say that a remaining gun is destroyed, without any specification for 1 or 2 seaters. Thus indeed, the observer's gun could be destroyed.

In Youplay, I've never seen a wounded observer, neither a destroyed observer's gun. I've had, and seen, dead observers...

Only the fire, smoke and dead observer should be apparent to the opponent. Thus, a destroyed/jammed gun should not be visible. You could guess that something is wrong with your opponent's guns when they do not take a shot, but you should not know if it is due to a jam or destroyed gun. It would add some bluff dimension to the game.

May be to be corrected in the future, it's not that annoying for now since everyone plays with the same rules here