Here Oliver Cowdery initially wrote had observed, using the past perfect that is found in the two previous clauses. His crossout of the had appears to be virtually immediate since the level of ink flow is unchanged. His correction probably reflects the reading found in the original manuscript (no longer extant here).
The simple past tense also agrees with the two following clauses that are connected to it by and ’s. The transition from the past perfect to the simple past tense in this passage agrees with the sharp transition that results when no and is found preceding “they observed”.
Summary: Maintain in Jarom 1:5 Oliver Cowdery’s corrected reading in 𝓟 (“they observed to keep the law of Moses”), apparently the reading in 𝓞.