Based on the definition of observer behavior in the wiki, the actual piston block will trigger an update on the observer. So if a piston block was in a block space observed by the observer, then it would update when the piston expanded or contracted.

This behavior does not apply to the piston head movement as quoted from the Wiki "A piston (not the head) extending or contracting" triggers redstone signal from the observer.

This is not the current behavior as of 1.2.5.15 - i.e. it is broken, according to your own documentation in the wiki. Re-creating this issue because it was closed as "working as intended", which is not the case based on the Wiki.