What’s observed after fool produces organic compound (7)

I believe the answer is:
nitrite
'organic compound' is the definition.
'nitrite' can be an answer for 'compound' (nitrite is a kind of compound). I am not sure about the 'organic' bit.
'what's observed after fool' is the wordplay.
'what's observed' becomes 'rite' (I can't explain this - if you can you should give a lot more credence to this answer).
'after' says to put letters next to each other.
'fool' becomes 'nit' (both can mean a stupid person).
'rite' put after 'nit' is 'NITRITE'.
'produces' acts as a link.
Can you help me to learn more?
(Other definitions for nitrite that I've seen before include "compound" , "salt" , "Chemical" , "Radical" .)
