How to pause the main script when handling an event using observeInBackground

-- solution 1:
define at the beginning of main script:
shouldWait = False

Make a function like:
def myFind(region, imageOrPattern, waittime = 3):
    while shouldWait:
        wait(1)
    return region.wait(imageOrPattern, waittime)

... and use it instead of the find operations, that needs to be guarded.

instead of
click(someImage)

use
click(myFind(SCREEN, someImage))

... and in the observe handler at the beginning:
global shouldWait
shouldWait = True
# do your handling
shouldWait = False

This is a basic solution, that might help in many cases. The risk is, that the handler event is triggered, but the handler not yet started and a find op has already begun.

-- solution 2:
Intercept the FindFailed situations, that are caused by the GUI event (e.g. popup hiding the target image), that should be handled by observeInBackground.
Since version 1.1.1 we have a callback feature for FindFailed situations:
http://sikulix-2014.readthedocs.io/en/latest/region.html#exception-findfailed

Similar to solution 1 you have to define and handle global variables for communication between the FindFailed handler and the observe handler.

The principal workflow:
- in FindFaild handler check, wether an observe event is or was handled
- if yes, wait for the completion of the observe handling and return with the REPEAT advice
- if no, then you have a normal FindFailed that should be handled as needed

This solution is a bit more complex, but has a chance, to get around all such conflict situations.

These solutions sound perfect, I see why you prefer it to be asked as it's own question rather than as a comment thread.

I unfortunately can't test them right now, however will test both and see how they work, but from first looks it would seem like Solution 1 would work fine but solution 2 might be the more robust.
Also thank you for the information on the findfailed exception handling!

no problem. take your time.