Interesting and requires some more thought but initially it seems that the necessary low entropy of the conscious observer is left out.<p>> In other words, if an observer knew all information regarding a system, there would be only one microstate, and the system would be devoid of entropy. This illustrates that entropy describes the information a conscious agent knows about a system, rather than being an inherent property of systems.<p>Knowing all the information in the system would require a omniscient consciousness which implies extremely low entropy. So entropy has to also include the information of the conscious being analyzing the environment and I think this steps into Godel's Incompleteness theorem as the entity inside the system can never have full omniscience, (unless that is God, which is another matter). This is also similar to Maxwell's daemon, where the daemon can lower entropy if it can individually control each particle, but this doesn't violate the 2nd Law because it requires the daemon keep track of all the particles somehow (which is a way of saying the system already starts with low entropy).