What I am able to deduce after watching this episode a second time is that they are playing with three generations of mind reading technologies.
1) The mind reading / mind linking technology in which Olivia was able to talk to her fiance using Walter's technology a few episodes back.
2) The "hunter" who seems to use a similar wire-link technology similiar to Walter's although the equipment used seems to be in smaller size. (also using a mind reading / mind linking technology) Some views of the oscilloscope type equipment seem to indicate two wavelengths are being looked at, similar to Walter's equipment.
3) "The observer" which does not seem to use any equipment at all but seems to be able to use the same mind reading / mind linking technology. Listen to the last part of the movie when Walter is talking to Peter in the hotel room about proximity and mind linking / mind reading, it seems to indicate this might be possible.
This leads me to believe either we are dealing with time travelers or something else... (Also notice the gun the hunter uses. It looks like a large prototype. The one the observer uses on Peter at the end seems to emanate the same pulse but smaller / looks like a normal gun.)
*** Also another thing I noticed on close examination of the HD version was that the observer's eye-piece (used in the restraunt) had a green-green-green-red small circles in the lower left corner. The same green-green-green-red small circles appeared on the "hunter"'s black hat.
If you look closely frame by frame at the observer's eye-piece, it looks like programming code appears. (A lot of IF THEN statements.) Maybe this isn't part of the show, but it is fun to notice.
Another interesting thing is that when the observer looks at his pocket watch in the restraunt it's 3:14 (or so) and the seconds are around second 5 or 6 when the explosion happens. (6 / 60 = 0.1). That is, 3.14 + 0.001 = 3.141??? (first sequence to PI.) Maybe another unitentional easter egg, maybe part of the plot. *shrug*
If the bald observer is from the future, maybe he is burying the diaries so that they can be found and decoded in the future?