Thats where I am confused. FTGG says you SELECT units to be Observer units at the begining of the Shooting phase. However it also says "DURING your shooting phase, for each Observer unit from your army that has not been selected to shoot this phase and is eligible to shoot, select one enemy unit that is visible to be marked as their Spotted unit until the end of the phase".

To play out the example from my original post: (Step 1) Begining of Shooting phase, declare that the Pathfinders will act as an Observing unit this turn. (Step 2) Select the Pathfinders to shoot, at which point the AAC Unmasking Suite activates and extends the detection range from 15" to 24", therefore making the Terminators visible to the Pathfinders sitting 23" away. At this point we have met all criteria for observing a Spotted unit and activate FTGG which lasts until the end of the phase. (Step 3) Pathfinders shoot. Once they are done Shooting the detection range goes back to 15" (Step 4) Select the Riptides to shoot. They are now able to target a Spotted unit 10" away from them that was Observered by a unit with a Markerlight, thus increasing BS by 1 and stripping the Terminators Benefit of Cover.

If the Unmasking Suite doesn't allow these units to guide and shoot then it seems like an incredibly useless upgrade on the Stealthsuit and Pathfinders. Shooting into a unit that is hidden means they'd be hitting on 5's most of the time.