...What good is UN observer status if they can't vote or bring issues to the General Assembly?...
As mentioned above, being an observer grants participation (within some limits) in the General Assembly, but even more important is that Palestine was granted observer status as the
State of Palestine. Under international law, a nation can only be recognized as a sovereign state if it has four things: a defined territory, a government, a permanent population, and the ability to enter into relations with other states. You don't need UN membership or the approval of the Security Council, but if other states aren't willing to enter into relations with you, you can't meet the fourth criteria, and so you can't be sure that international law will recognize you as a sovereign state.
Joining the UN as a non-member observer state allows Palestine to join international organizations, to take cases to the International Court of Justice, and to sign treaties that are deposited with the UN Secretary-General. In other words, getting that observer status gave Palestine the undisputed capacity
to enter into relations with other states.
Essentially, the benefit for Palestine is that they are now legally considered a sovereign state under international law. It doesn't matter that America and its allies and many European countries don't recognize their statehood, because that isn't one of the requirements for statehood.
Taiwan, if it chose to approach the UN in 2008 with no chance of actually gaining full membership, might well have considered the benefit of recognition as a sovereign state to be worth seeking observer status for.