Andy Resnick said:
If entropy is observer-dependent, then chemical reactions (of which the entropy is a component) are also observer-dependent; as a specific example, let's discuss Na-K-ATPase, an enzyme that hydrolyzes ATP and generates a chemical gradient. So it's superficially related to the entropy of mixing. That enzyme has been working long before anyone knew about atoms, let alone the difference between Na and K, the existence of semipermeable membranes, and the Gibbs free energy.
Given that the function and efficiency of that chemical reaction is independent of our state of information, how can the energy content (the entropy of mixing) be dependent on the observer?
Let me see if I can address that, and let me start with a somewhat different example, that may illustrate it better, but also say how your example fits into that.
Say you have a large bottle of hydrogen, separated into two chambers. In one, the gas is hot, in the other one, the gas is cold. You exploit the temperature difference to extract energy, until finally everything is at the same temperature. The entropy is maximized, no more energy can be extracted; the system is at equilibrium.
Or is it...? Just fuse some hydrogen nuclei. - Wow! Suddenly, a portion of your gas is very hot! The system is not at equilibrium at all and you can extract lots more energy. How can that be? Has the entropy decreased, has the second law been broken?
Well, what happened there? You had a model. You made assumptions. When determining entropy, you chose a specific set of macroscopic variables and degrees of freedom. But the experiment changed along a degree of freedom your model did not anticipate. You counted the microstates, but all of them consisted of hydrogen atoms in various configurations; none assumed that the hydrogen might change into something else. - You could of course fix everything by including the new degrees of freedom in your model - but then the entropy will be different, there will be many more microstates, and indeed, the equilibrium will be at a very different point.
Does that mean that one model is better than the other, in general? No. When you're running an experiment and you describe it in physics, you always make assumptions, you always have a model that fits the particular experiment. And when defining entropy, you choose the set of macroscopic variables and microstates appropriate for that model.
If you had the bottle of hydrogen, and didn't do the nuclear fusion (or even didn't know how to do it), and it didn't start on its own, the system
would be at equilibrium. Your model wasn't wrong for that case.
So the fundamental question is - what do you allow to happen in an experiment? And here, you needn't even assume an intelligent experimenter; it can be a process that "does" the experiment. The capabilities of the particular process that extracts energy determine the amount of energy that can be extracted before equilibrium is reached. The example you mention utilizes a specific way to exploit energy, so you must include that in your model - otherwise your model won't describe the situation that happens. But if it didn't happen, and you assumed it did, your model also wouldn't describe the situation. (ETA: Let me expand, to answer more directly what you were asking: the question of whether the observer can tell the difference between substances is not about whether he's able to explain Na and K atoms, but whether he can observe an experiment with a result depending on the difference.)
Perhaps one might think of some absolute entropy and equilibrium - a state where no more energy can be extracted, no matter what you do, no matter what anyone
can do. But let's be honest - nowhere in thermodynamics is such an equilibrium ever reached. If the substance you have isn't iron, then you haven't even begun to extract all the energy there is. But this is considered irrelevant; instead, we stick with a certain set of thermodynamic processes and that represents our model. But we must not forget that these processes don't describe all the natural processes that can happen in the universe.
Now, one of the less common ways to extract energy better than others is to have knowledge about the details of the system. If an observer - or even a natural process - has that information, then for him, the entropy is lower, so the system really isn't at equilibrium, and that can be exploited. It's counterintuitive to classical thermodynamics, but in statistical thermodynamics, it seems a valid and consistent concept (with consequences such as Landauer's principle) - and maybe, if you consider the earlier examples, it needn't be more scary than saying that for one person, the bottle of hydrogen is at equilibrium, and for another one with a fusion reactor, it's not. The analogy is not perfect, but perhaps it gives the idea.