To connect to a game as an observer, you will have to resign in the middle of the game as Phill has said. However, it would be best to enter the game together with another player as a single player (that means, you both set the same civs and player number). Then, when you're in the game, just resign and watch the others fight it out.
Shang villager rush? ROFL that's practically useless. I assure you that you will never see it now. Only crazy players use it, and only the best of the best players in the world can execute it to perfection. If he lets me recover just a bit, I have a high chance of beating him. A villager rush that isn't carried out properly will just slow down the whole game as both sides struggle to reach Tool age with hardly any villies left.
Now, a better question would be how to counter Shang Tool rushes. I agree that they're hard to beat. You will just have to be aware of what's going on around you all the time. You can do so by constantly checking the achievements screen during the game. Especially against fast civs, always check the exploration percentage. If you see that a Shang player has very high exploration, you know what he's up to.If you are lucky enough to find his villies building a barracks near your base, send as many of your villies as possible over to kill them and stop the barracks from being built. Also, it would be wise now to relocate your woodies. It's easy to run and relocate your foodies in Stone/early Tool age, so you can have them continue gathering food to Tool asap. Woodies are stuck to a forest and they're easy to find.
Remember, before you Tool, leave some spare resources, just in case. You don't want to be attacked by axers and scouts with +2 attack and armour while you're in the midst of Tooling. What's the use of reaching Tool then? You'll be left with nothing but just a couple of villies hiding behind some forest while your TC is being hacked to oblivion by your opponent. Defend your villies at all cost. If you lose even half of them you can resign. If your Shang opponent is not very competent and Tool rushes you when you're already in Tool, be very glad. You should be able to wall in now and take out any enemy units inside your base with your own Tool age units. As long as you can hold out and keep your econ intact, your opponent has failed miserably and will from then on be slower than you for the rest of the game. High chance of you turning the tables and beating him. [This message has been edited by Duan Xuan (edited 08-23-2004 @ 05:43 AM).]