With heads of Royal Observatory, made out constellation (9)
I believe the answer is:
andromeda
'constellation' is the definition.
(Andromeda is an example)
'with heads of royal observatory made out' is the wordplay.
'with' becomes 'and' (I've seen this before**).
'heads of' suggests taking the first letters.
'out' indicates an anagram (out can mean wrong or inaccurate).
The initial letters of 'royal observatory' is 'ro'.
'made' with letters rearranged gives 'meda'.
'and'+'ro'+'meda'='ANDROMEDA'
(Other definitions for andromeda that I've seen before include "princess barely chained to rock" , "Legendary beauty" , "Adored man on constellation with great spiral nebula" , "Constellation; bog rosemary" , "woman rescued by Perseus" .)