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Here's what should happen with the Observatory, first encounter.
>Walk up route 5
>Reach a pass, someone stops you.
>"What's up there, you ask? It's the old observatory. It's been there since anyone can remember, but no one knows when it was built, and no one knows what happened to it.
>But don't go in! Not that you could, anyway. It's filled with wicked nasty pokemon and ghosts!! Gramps tells me that they'd dare eachother to go up when he was young. You can't even get close to the building now. Rumour has it that the champion went in to investigate, and of her pokemon almost died inside! Then it was sealed up tighter than a Caracrust's nest.
>If you really want to go up, you can, but there isn't much to see.
You can go up to an area surrounding the Observatory, filled with some low-leveled pokemon. It's a small outside area to explore, a bit like Virbank Complex or the Dreamyard. It's on top of the mountain, and you can see a steep cliff disappearing into the darkness on one side. You can't get close to the walls, and there is no way in.
When you exit:
>Someone, help! Help!
This is the ET attacking "gramps", looking for some sort of relic, or a story, or information, or whatever floats your boat. You run down to the house (it's more a shack in a secluded place on the mountain path) and chase them off. Then we can introduce the ET in whatever way you want.
Gramps is a strange, cantankerous old man who takes a liking to you once you chase off the grunts. He doesn't trust too many other people.