Once over Sheep Creek, the easy hiking continues past the turnoff for the Bullion Plateau trail, until reaching Bullion Creek at about the 6km mark. Crossing Bullion Creek is the crux of Day 1 of the hike - it's swift, fairly deep, and icy cold. Even when the creek is only about knee-deep, it's powerful enough that you can feel small pebbles rolling along the stream bed underfoot! Doing the hike during a dry spell in August, we were able to cross the creek, cautiously, at the point where the trail intersects it, but under higher water conditions you might well need to detour downstream to where the creek braids into multiple channels. Picking up the trail on the other side, there are no further obstacles and the route is obvious as far as the Bullion sand dunes, 9km in from the trailhead. We kept a careful lookout for bears (and made lots of noise) throughout this section - a mother and cub had apparently been hanging out here earlier in the season - but saw nothing except some paw prints.
Beyond the sand dunes, Parks Canada's trail guide notes that there's a choice of route for the next 6km: either one can follow the river flats, or one can follow drier ground along the hillside at the edge of the valley. The ranger recommended the river route to us, and unless it's really obviously too wet to be passable this is sound advice. The trail along the river bank is boggy in places, but it's flat, direct, and easy to follow, while the trail across the hillside (which we took by mistake on the way out, since there's a spot where a small lake makes it seem that there's no riverside route) evidently sees little traffic and requires some bushwhacking. There are beautiful views along the Slims valley throughout this section. If you set off late, it's possible to find good camp sites here at the edge of the marshy meadows that adjoin the river.
The final stretch of the Slims West trail starts at the 15km mark, when the trail reaches the first alluvial fan. From this point on, the river side route is no longer passable, even in dry conditions, so the trail, marked by large wooden posts and cairns, tracks inland and into the trees. There's some up and down to be negotiated here - but nothing that we found too strenuous - before one arrives at the Canada Creek campsite 22.5km from the trailhead. This is also the end of the official Slims River West trail - beyond the campsite there is a well-established route but no maintained trail toward Observation Mountain.
Once across Canada Creek, the route, although unmarked, is obvious. Just turn right (west) and follow Canada Creek up to its confluence with Columbia Creek, and then follow Columbia Creek upstream until you come to the trail that leads up to the plateau below Observation. This is a barren and heavily eroded canyon, but it offers straightforward hiking and the only trick is to make sure you find the right ridge to ascend toward the plateau. The right route starts at least 500m upstream from the confluence of the creeks, was clearly marked by a large cairn (at least in summer 2010), and is - once you're on it - a very obvious hiking trail. I belabor these points only because we signally failed to find the right route. Instead, we deluding ourselves into thinking that a few goat scratchings were actually a trail, and bushwhacked a thousand feet up an unmarked ridge less than 100m beyond the confluence. We attained a nice - and no doubt rarely seen - vantage of Columbia Creek, but otherwise only confirmed the truism of Parks Canada's advice: the standard route up Observation is much the easiest...
Back on the right route, the trail up from the creek to the plateau is clear but short and steep. It's pretty easy to ascend, but there are lengthy stretches of loose footing that make for slow going on the way down. It's not dangerous, but this would be a really bad place to twist an ankle so care is needed, and a hiking pole comes in useful. Once up on the plateau the trail becomes obscure. A GPS comes in handy here to waypoint the spot, and ensure you don't start out down the wrong ridge on the descent. Since time was short after our ill-advised forays elsewhere on the mountain, we side-hilled our way across the plateau to the first point where there was a good view of the Kaskawulsh glacier. That was about a mile, and it would have taken another mile or so of hiking across the alpine to reach the edge of the plateau for the best views. Alternatively, of course, you can head straight to the summit of Observation Mountain. Regardless, the panorama is epic and astounding.
Other options... We did the vanilla 3-day version of the hike, but if you have more time there are other possibilities worth exploring. Once across Canada Creek, it's tempting to continue hiking straight toward the toe of the glacier, which is partially hidden by a low rise. There's not enough time for a side trip like that if you're trying to summit Observation, but with an extra day you could bushwhack along the slopes between the glacier and the south-west side of Observation. One group we met was in fact planning to do just that instead of climbing the mountain. Another possibility would be to camp on the far side of Canada Creek, toward the confluence with Columbia Creek. Crossing Canada Creek can be the most time consuming part of the trip up the mountain, so a camp across the creek would allow more time to properly explore the vast plateau (and perhaps try climbing the peak that lies due west of Observation Mountain, from where the view is probably spectacular).
Parks Canada Kluane National Park page has basic information on the park, including a list of day hikes and possible backpacking routes (including some true epics). During the summer there are updates whenever there are trail closures (check under "Important Bulletins").
More photos from Kluane and the Yukon, courtesy of my brother.