Why would I want to disable the observatory

Faith, on its own, can't be used for anything at all without converting at least some of it into total faith on the religion screen. As you Praise the Sun, you'll unlock various upgrades on the Religion screen, many of which get stronger the more faith you convert.

Each observatory increases the chance to auto-observe, but the chance will never be 100% because it diminishes after 75%.

The relevant part of the code is the following (inside calender.js):

var autoChance = this.game.bld.getEffect("starAutoSuccessChance");  //in %
            var rand = this.game.rand(100);

            if(
                (this.game.ironWill && (self.game.rand(100) <= 25)) ||
                (rand <= autoChance)
            ){  
                dojo.hitch(this, this.observeHandler)({}, true);
            }

Every observatory increases your starAutoSuccesChance with 1, so 11 in your case. However, this.game.bld.getEffect does the hyperbolic effect which makes sure the chance does not become 100%. In another answer(which deserves more upvotes imo) this is perfectly explained, so I will not do it again.

Here you also see is that the chance is compared with a random number under 100 (rand <= autoChance) so the autoChance (or starAutoSuccessChance untill 75 observatories) is indeed the percentage of auto-observes.