diff --git a/src/lib/dom-api-observe-distributed-nodes.html b/src/lib/dom-api-distributed-nodes-observer.html
similarity index 74%
rename from src/lib/dom-api-observe-distributed-nodes.html
rename to src/lib/dom-api-distributed-nodes-observer.html
index e8fe88746f..00f6512222 100644
--- a/src/lib/dom-api-observe-distributed-nodes.html
+++ b/src/lib/dom-api-distributed-nodes-observer.html
@@ -16,20 +16,20 @@
     var Settings = Polymer.Settings;
 
     /**
-     * DomApi.ObserveDistributedNodes notifies when the list returned by 
+     * DomApi.DistributedNodesObserver notifies when the list returned by 
      * a <content> element's `getDistributedNodes()` may have changed.
      * It is not meant to be used directly; it is used by
      * `Polymer.dom(node).observeNodes(callback)` to observe changes to
      * `<content>.getDistributedNodes()`.
      */
-    DomApi.ObserveDistributedNodes = function(domApi) {
-      DomApi.ObserveNodes.call(this, domApi);
+    DomApi.DistributedNodesObserver = function(domApi) {
+      DomApi.EffectiveNodesObserver.call(this, domApi);
     };
 
-    DomApi.ObserveDistributedNodes.prototype = 
-      Object.create(DomApi.ObserveNodes.prototype);
+    DomApi.DistributedNodesObserver.prototype = 
+      Object.create(DomApi.EffectiveNodesObserver.prototype);
 
-    Polymer.Base.extend(DomApi.ObserveDistributedNodes.prototype, {
+    Polymer.Base.extend(DomApi.DistributedNodesObserver.prototype, {
 
       // NOTE: ShadyDOM distribute provokes notification of these observers
       // so no setup is required.
@@ -49,7 +49,7 @@
 
     if (Settings.useShadow) {
       
-      Polymer.Base.extend(DomApi.ObserveDistributedNodes.prototype, {
+      Polymer.Base.extend(DomApi.DistributedNodesObserver.prototype, {
         
         // NOTE: Under ShadowDOM we must observe the host element for
         // changes.
@@ -60,9 +60,13 @@
             if (host) {
               this._observer = Polymer.dom(host).observeNodes(
                 this._scheduleNotify.bind(this));
+              // NOTE: we identify this listener as needed for <content>
+              // notification so that enableShadowAttributeTracking 
+              // can find these observers an ensure that we pass always 
+              // pass notifications down.
+              this._observer._isContentListener = true;
               if (this._hasAttrSelect()) {
                 Polymer.dom(host).observer.enableShadowAttributeTracking();
-                this._observer._alwaysCallListener = true;
               }
             }
           }
diff --git a/src/lib/dom-api-observe-nodes.html b/src/lib/dom-api-effective-nodes-observer.html
similarity index 84%
rename from src/lib/dom-api-observe-nodes.html
rename to src/lib/dom-api-effective-nodes-observer.html
index e8432a0adb..a4d41f70f4 100644
--- a/src/lib/dom-api-observe-nodes.html
+++ b/src/lib/dom-api-effective-nodes-observer.html
@@ -17,18 +17,19 @@
     var hasDomApi = Polymer.DomApi.hasDomApi;
 
     /**
-     * DomApi.ObserveNodes tracks changes to an element's effective child nodes,
-     * the same list returned from `Polymer.dom(node).getEffectiveChildNodes()`.
+     * DomApi.EffectiveNodesObserver tracks changes to an element's 
+     * effective child nodes, the same list returned from 
+     * `Polymer.dom(node).getEffectiveChildNodes()`.
      * It is not meant to be used directly; it is used by
      * `Polymer.dom(node).observeNodes(callback)` to observe changes.
      */
-    DomApi.ObserveNodes = function(domApi) {
+    DomApi.EffectiveNodesObserver = function(domApi) {
       this.domApi = domApi;
       this.node = this.domApi.node;
       this._listeners = [];
     };
 
-    DomApi.ObserveNodes.prototype = {
+    DomApi.EffectiveNodesObserver.prototype = {
 
       addListener: function(callback) {
         if (!this._isSetup) {
@@ -132,7 +133,7 @@
         var nodes = this._getEffectiveNodes();
         for (var i=0, o; (i < o$.length) && (o=o$[i]); i++) {
           var info = this._generateListenerInfo(o, nodes);
-          if (info || o._alwaysCallListener) {
+          if (info || o._alwaysNotify) {
             this._callListener(o, info);
           }
         }
@@ -182,13 +183,13 @@
 
     if (Settings.useShadow) {
 
-      var baseSetup = DomApi.ObserveNodes.prototype._setup;
-      var baseCleanup = DomApi.ObserveNodes.prototype._cleanup;
+      var baseSetup = DomApi.EffectiveNodesObserver.prototype._setup;
+      var baseCleanup = DomApi.EffectiveNodesObserver.prototype._cleanup;
 
-      var beforeCallListeners = DomApi.ObserveNodes
+      var beforeCallListeners = DomApi.EffectiveNodesObserver
         .prototype._beforeCallListeners;
 
-      Polymer.Base.extend(DomApi.ObserveNodes.prototype, {
+      Polymer.Base.extend(DomApi.EffectiveNodesObserver.prototype, {
         
         _setup: function() {
           if (!this._observer) {
@@ -228,6 +229,10 @@
 
         enableShadowAttributeTracking: function() {
           if (this._observer) {
+            // provoke all listeners needed for <content> observation
+            // to always call listeners when no-op changes occur (which may
+            // affect lower distributions.
+            this._makeContentListenersAlwaysNotify();
             this._observer.disconnect();
             this._observer.observe(this.node, { 
               childList: true,
@@ -240,6 +245,13 @@
               Polymer.dom(host).observer.enableShadowAttributeTracking();
             }
           }
+        },
+
+        _makeContentListenersAlwaysNotify: function() {
+          for (var i=0, h; i < this._listeners.length ; i++) {
+            h = this._listeners[i];
+            h._alwaysNotify = h._isContentListener;
+          }
         }
 
       });
diff --git a/src/lib/dom-api.html b/src/lib/dom-api.html
index f85e7cf02c..9a7b43fea4 100644
--- a/src/lib/dom-api.html
+++ b/src/lib/dom-api.html
@@ -116,9 +116,7 @@
         if (addedInsertionPoint) {
           this._updateInsertionPoints(root.host);
         }
-        if (this.observer) {
-          this.observer.notify();
-        }
+        this.notifyObserver();
         return node;
       },
 
@@ -142,9 +140,7 @@
             nativeRemoveChild.call(container, node);
           }
         }
-        if (this.observer) {
-          this.observer.notify();
-        }
+        this.notifyObserver();
         return node;
       },
 
@@ -280,10 +276,7 @@
       _removeNodeFromParent: function(node) {
         var parent = node._lightParent;
         if (parent && hasDomApi(parent)) {
-          var d =  factory(parent);
-          if (d._observer) {
-            d._observer.removeNode(node);
-          }
+          factory(parent).notifyObserver();
         }
         this._removeNodeFromHost(node, true);
       },
@@ -478,7 +471,10 @@
         var c$ = this.childNodes;
         for (var i=0, l=c$.length, c; (i<l) && (c=c$[i]); i++) {
           if (c.localName === CONTENT) {
-            list = list.concat(factory(c).getDistributedNodes().slice());
+            var d$ = factory(c).getDistributedNodes();
+            for (var j=0; j < d$.length; j++) {
+              list.push(d$[j]);
+            }
           } else {
             list.push(c);
           }
@@ -552,8 +548,8 @@
         if (callback) {
           if (!this.observer) {
             this.observer = this.node.localName === CONTENT ?
-              new DomApi.ObserveDistributedNodes(this) :
-              new DomApi.ObserveNodes(this);
+              new DomApi.DistributedNodesObserver(this) :
+              new DomApi.EffectiveNodesObserver(this);
           }
           return this.observer.addListener(callback);
         }
@@ -569,6 +565,12 @@
         if (this.observer) {
           this.observer.removeListener(handle);
         }
+      },
+
+      notifyObserver: function() {
+        if (this.observer) {
+          this.observer.notify();
+        }
       }
 
     };
diff --git a/src/mini/shady.html b/src/mini/shady.html
index 34da3dbe5f..6edab074dd 100644
--- a/src/mini/shady.html
+++ b/src/mini/shady.html
@@ -12,8 +12,8 @@
 <link rel="import" href="../lib/dom-api-flush.html">
 <link rel="import" href="../lib/dom-api-event.html">
 <link rel="import" href="../lib/dom-api-classlist.html">
-<link rel="import" href="../lib/dom-api-observe-nodes.html">
-<link rel="import" href="../lib/dom-api-observe-distributed-nodes.html">
+<link rel="import" href="../lib/dom-api-effective-nodes-observer.html">
+<link rel="import" href="../lib/dom-api-distributed-nodes-observer.html">
 <script>
 
   (function() {
@@ -480,17 +480,14 @@
       for (var i=0, c; i < root._insertionPoints.length; i++) {
         c = root._insertionPoints[i];
         if (hasDomApi(c)) {
-          var dc = Polymer.dom(c);
-          if (dc.observer) {
-            dc.observer.notify();
-          }
+          Polymer.dom(c).notifyObserver();
         }
       }
     }
 
     function notifyInitialDistribution(host) {
-      if (hasDomApi(host) && Polymer.dom(host).observer) {
-        Polymer.dom(host).observer.notify();
+      if (hasDomApi(host)) {
+        Polymer.dom(host).notifyObserver();
       }
     }
 
diff --git a/test/unit/polymer-dom-observeNodes.html b/test/unit/polymer-dom-observeNodes.html
index 5a2df74606..9643fd635e 100644
--- a/test/unit/polymer-dom-observeNodes.html
+++ b/test/unit/polymer-dom-observeNodes.html
@@ -146,6 +146,19 @@
     });  
     </script>
   </dom-module>
+
+  <dom-module id='test-content-attr-inside'>
+    <template>
+      <test-content-attr3 id="content"><content></content></test-content-attr3>
+    </template>
+    <script>
+    HTMLImports.whenReady(function() {
+      Polymer({
+        is:'test-content-attr-inside'
+      });
+    });  
+    </script>
+  </dom-module>
   
 
   <test-content><div>A</div><div>B</div></test-content>
@@ -467,6 +480,38 @@
       document.body.removeChild(el);
     });
 
+    test('observe effective children changes when adding to another host', function() {
+      var el = document.createElement('test-content1');
+      document.body.appendChild(el);
+      var recorded;
+      var handle = Polymer.dom(el.$.content).observeNodes(function(info) {
+        recorded = info;
+      });
+      Polymer.dom.flush();
+      // add
+      var d = document.createElement('div');
+      var d1 = document.createElement('div');
+      Polymer.dom(el).appendChild(d);
+      Polymer.dom(el).appendChild(d1);
+      Polymer.dom.flush();
+      assert.equal(recorded.addedNodes.length, 2);
+      assert.equal(recorded.removedNodes.length, 0);
+      assert.equal(recorded.addedNodes[0], d);
+      assert.equal(recorded.addedNodes[1], d1);
+      // add somewhere else... we should see these as removes
+      Polymer.dom(document.body).appendChild(d);
+      Polymer.dom(document.body).appendChild(d1);
+      Polymer.dom.flush();
+      assert.equal(recorded.addedNodes.length, 0);
+      assert.equal(recorded.removedNodes.length, 2);
+      assert.equal(recorded.removedNodes[0], d);
+      assert.equal(recorded.removedNodes[1], d1);
+      // cleanup
+      Polymer.dom(document.body).removeChild(d);
+      Polymer.dom(document.body).removeChild(d1);
+      document.body.removeChild(el);
+    });
+
     test('observe effective children inside deep distributing element', function() {
       var el = document.createElement('test-content3');
       document.body.appendChild(el);
@@ -651,6 +696,51 @@
       });
     });
 
+    test('observe effective children attr changes inside deep distributing element without outer select (async)', function(done) {
+      var el = document.createElement('test-content-attr-inside');
+      document.body.appendChild(el);
+
+      var recorded;
+      var content = el.$.content.$.content.$.content.$.content;
+      var handle = Polymer.dom(content).observeNodes(function(info) {
+        recorded = info;
+      }, {attributes: true});
+      Polymer.dom.flush();
+      recorded = null;
+      // add
+      var d = document.createElement('div');
+      var d1 = document.createElement('div');
+      Polymer.dom(el).appendChild(d);
+      Polymer.dom(el).appendChild(d1);
+      Polymer.dom.flush();
+      assert.equal(recorded, null);
+      Polymer.dom(d).setAttribute('a', '');
+      Polymer.dom(d).setAttribute('b', '');
+      setTimeout(function() {
+        assert.equal(recorded, null);
+        Polymer.dom(d).setAttribute('c', '');
+        setTimeout(function() {
+          assert.equal(recorded.addedNodes.length, 1);
+          assert.equal(recorded.removedNodes.length, 0);        
+          assert.equal(recorded.addedNodes[0], d);
+          Polymer.dom(d).removeAttribute('c');
+          setTimeout(function() {
+            assert.equal(recorded.addedNodes.length, 0);
+            assert.equal(recorded.removedNodes.length, 1);        
+            assert.equal(recorded.removedNodes[0], d);
+            recorded = null;
+            Polymer.dom(content).unobserveNodes(handle);
+            Polymer.dom(d).setAttribute('c', '');
+            setTimeout(function() {
+              assert.equal(recorded, null);
+              document.body.removeChild(el);
+              done();
+            });
+          });
+        });
+      });
+    });
+
     test('add/remove multiple observers', function() {
       var el = document.createElement('test-content1');
       document.body.appendChild(el);