> is there something inside the cats brain that is doing the observing? Or is it just a computing device that operates on a continuous input-processing-output loop that learns from previous loops?

The big question is, is there a difference? We haven't really established whether a sufficiently complex input-processing-output algorithm could also be a self-aware thing inside the cat's brain doing the observing. To posit that both things are separate mechanisms is a dangerous assumption, I think, when we don't really know what that "thing inside the cat's brain that observes" is.