Observed to be not all washed up (3)

I believe the answer is:

saw

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'observed' is the definition.
(seen)

I cannot understand how the rest of the clue works.

(Other definitions for saw that I've seen before include "Hand tool; proverb" , "Observed; tool" , "Viewed; adage" , "Grasped" , "Spotted" .)

I've seen this clue in the Evening Standard.

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