Observing throne with head of state (7)
I believe the answer is:
looking
'observing' is the definition.
(I've seen this before)
'throne with head of state' is the wordplay.
'throne' becomes 'loo' (both can mean a toilet).
'with' means one lot of letters go next to another.
'head of state' becomes 'king'.
'loo'+'king'='LOOKING'
(Other definitions for looking that I've seen before include "Observing" , "Directing the eyes towards" , "Viewing" , "Directing one's gaze" , "Seeming, appearing" .)