[The Great Pyramid] ends not in a point, as mathematical pyramids do, but in a little flat or square. […] By my measure it is thirteen feet, and 280 of 1000 parts of the English foot. Upon this flat [top], if we assent to the opinion of Proclus, it may be supposed that the Aegyptian Priests made their observations in Astronomy; and that from hence, or near this place they discovered, by the rising of Sirius the [Sothic cycle]. […] That the priests might near these Pyramids make their observations, I no way question […] But that these pyramids were designed for observatories […] is no way to be credited upon the single authority of Proclus. (pp.98-100)
This is what Proclus actually said in standard translation:
For extending to the Egyptian priests the most ancient transactions of the Greeks, he [Solon] leads them to the narration of their antiquities; of which the Egyptians participate in a remarkable degree, as they survey without impediment the celestial bodies, through the purity of the air, and preserve ancient memorials, in consequence of not being destroyed either by water or fire. (emphasis in original)
Using the more ancient things known to the Greeks as inducements to the priests, he [Solon] seduces them, as it were, into discussion of antiquity as they knew it. This was a subject the Egyptians have an outstanding grasp of, since they observe the heaven unhindered on account of the purity of the air, and they preserve things of old in their memory on account of their being destroyed neither by flood nor by fire. (trans. Harold Tarrant)
Then, a bit later, Proclus writes that “the history is from pillars, in which things paradoxical and worthy of admiration, whether in actions or inventions, are inscribed.”
Greaves wrote that he believed that obelisks, pillars tapering to a pyramid-shaped peak, were “but lesser models of the Pyramids” (p.87), and he recalled the tradition that “all sciences are inscribed” in the Pyramids (p.125), though his own firsthand observations contradicted the point. Since Greaves discounted the claim he ascribes to Proclus that the Egyptians used the pyramids as observatories, it may well be that he was reading into Proclus’ two passages a discussion of the Pyramids in light of the other traditions about the pyramids with which Greaves disagrees. The later information in Greaves about the Sothic cycle is Greaves's own inference and is not derived from Proclus.
From Greaves’s account, Richard Anthony Proctor in Old and New Astronomy (1888) grossly exaggerated Greaves’s discussion of the currently existing small square platform at the top of the pyramid into something completely different:
…we are told by Proclus that the priests observed from the summit of the pyramid, when that structure terminated at the top in a platform. [...] Unquestionably, Proclus must have been referring to a tradition relating to a time when the grand gallery of the Great Pyramid opened out on a large square platform, where priests could be stationed in order to observe and record observations... (p.23)
These claims then reappear wholesale in later alternative history books. Robert Schoch, for example, repeats it, with credit to Proctor, in Pyramid Quest (2005), without any effort to cite Proclus directly. From there he attempts to divine Egyptian astronomical techniques based on this speculative notion. John Anthony West does the same in The Traveler’s Key to Ancient Egypt (1996), though West completely misunderstands the distinction between the (assumed) Proclus and Proctor’s own ideas: Proclus, he said, “mentioned that the Great Pyramid had served as an observatory before it had been completed” (p.91). Needless to say, Proctor’s claim entered the work of Robert Bauval and Adrian Gilbert, neither of whom sought Proclus’ original text but who, in The Orion Mystery (1994) pretended as though the line attributed to Proclus by Proctor had an existence outside of Proctor (p.43).
Other authors also repeated Proctor’s speculation with varying allegiance to fact. In Starseekers (1980) Colin Wilson recited the claims with attribution to Proctor, but by the time of From Atlantis to the Sphinx (2004), he wrote that “it had been stated as fact” by Proclus that “the Pyramid was used as an observatory while it was under construction.” He then says Proctor merely repeated Proclus’ original claim, using nearly the same words as Bauval and Gilbert (p.63). Giovanna Magi, in The Pyramids of Giza and the Sphinx (2006) dispenses with Proctor altogether and attributes the claim solely to Proclus, who she says inspired “a number of eighteenth century astronomers” (p.12)—wrong on all counts since Greaves wrote in the seventeenth century and Proctor the nineteenth. Proclus is again claimed as the originating source in Alan Alford’s Pyramid of Secrets (2003), though all of his citations are indirect—to Proctor, Bauval, and other alternative writers.
The long and short of it is that alternative writers never check citations or look at primary sources. If there were any truth to the claim that Proclus said the Great Pyramid was an observatory while under construction, surely more than three centuries of authors researching the claim should have turned up something by now. I'd love to be proved wrong, but the complete lack of any citations to the primary source--which in all modern translations says nothing about the Pyramids--is certainly troubling.