diff --git a/test/lib/dropevents/receiver.go b/test/lib/dropevents/receiver.go
index 4453b4f4714..6b18f2be10d 100644
--- a/test/lib/dropevents/receiver.go
+++ b/test/lib/dropevents/receiver.go
@@ -32,6 +32,20 @@ const (
 	NumberKey        = "NUMBER"
 )
 
+// count is only used for SKIP_ALGORITHM=Sequence.
+func SkipperAlgorithmWithCount(algorithm string, count uint64) Skipper {
+	switch algorithm {
+	case Fibonacci:
+		return &dropeventsfibonacci.Fibonacci{Prev: 1, Current: 1}
+
+	case Sequence:
+		return dropeventsfirst.First{N: count}
+
+	default:
+		panic("unknown algorithm: " + algorithm)
+	}
+}
+
 func SkipperAlgorithm(algorithm string) Skipper {
 
 	switch algorithm {
diff --git a/test/lib/recordevents/observer/observer.go b/test/lib/recordevents/observer/observer.go
index 9933542d94e..3d5f3858fda 100644
--- a/test/lib/recordevents/observer/observer.go
+++ b/test/lib/recordevents/observer/observer.go
@@ -22,6 +22,8 @@ import (
 	"sync/atomic"
 	"time"
 
+	"knative.dev/eventing/test/lib/dropevents"
+
 	cloudeventsbindings "github.com/cloudevents/sdk-go/v2/binding"
 	cloudeventshttp "github.com/cloudevents/sdk-go/v2/protocol/http"
 	"github.com/kelseyhightower/envconfig"
@@ -39,9 +41,12 @@ type Observer struct {
 	// EventLogs is the list of EventLog implementors to vent observed events.
 	EventLogs recordevents.EventLogs
 
-	ctx       context.Context
-	seq       uint64
+	ctx context.Context
+	seq uint64
+	// Increment this for every dropped event that we see
+	dropSeq   uint64
 	replyFunc func(context.Context, http.ResponseWriter, recordevents.EventInfo)
+	counter   *dropevents.CounterHandler
 }
 
 type envConfig struct {
@@ -63,6 +68,13 @@ type envConfig struct {
 	// This string to append in the data field in the reply, if enabled.
 	// This will threat the data as text/plain field
 	ReplyAppendData string `envconfig:"REPLY_APPEND_DATA" default:"" required:"false"`
+
+	// If events should be dropped, specify the strategy here.
+	SkipStrategy string `envconfig:"SKIP_ALGORITHM" default:"" required:"false"`
+
+	// If events should be dropped according to Linear policy, this controls
+	// how many events are dropped.
+	SkipCounter uint64 `envconfig:"SKIP_COUNTER" default:"0" required:"false"`
 }
 
 func NewFromEnv(ctx context.Context, eventLogs ...recordevents.EventLog) *Observer {
@@ -81,12 +93,25 @@ func NewFromEnv(ctx context.Context, eventLogs ...recordevents.EventLog) *Observ
 		logging.FromContext(ctx).Info("Observer won't reply with an event")
 		replyFunc = NoOpReply
 	}
+	var counter *dropevents.CounterHandler
+
+	if env.SkipStrategy != "" {
+		counter = &dropevents.CounterHandler{
+			Skipper: dropevents.SkipperAlgorithmWithCount(env.SkipStrategy, env.SkipCounter),
+		}
+	} else {
+		counter = &dropevents.CounterHandler{
+			// Don't skip anything, since count is 0. nop skipper.
+			Skipper: dropevents.SkipperAlgorithmWithCount(dropevents.Sequence, 0),
+		}
+	}
 
 	return &Observer{
 		Name:      env.ObserverName,
 		EventLogs: eventLogs,
 		ctx:       ctx,
 		replyFunc: replyFunc,
+		counter:   counter,
 	}
 }
 
@@ -136,12 +161,30 @@ func (o *Observer) ServeHTTP(writer http.ResponseWriter, request *http.Request)
 		Origin:      request.RemoteAddr,
 		Observer:    o.Name,
 		Time:        time.Now(),
-		Sequence:    atomic.AddUint64(&o.seq, 1),
 	}
+	shouldSkip := o.counter.Skip()
+
+	// We still want to emit the event to make it easier to see what we had oberved, but
+	// we want to transform it a little bit before emitting so that it does not count
+	// as the real event that we want to emit.
+	if shouldSkip {
+		eventInfo.Sequence = atomic.AddUint64(&o.dropSeq, 1)
+		eventInfo.Event.SetType("dropped-" + eventInfo.Event.Type())
+	} else {
+		// Increment the sequence only if we're not dropping so that we do not
+		// introduce side effects.
+		eventInfo.Sequence = atomic.AddUint64(&o.seq, 1)
+	}
+
 	err := o.EventLogs.Vent(eventInfo)
 	if err != nil {
 		logging.FromContext(o.ctx).Warnw("Error while venting the recorded event", zap.Error(err))
 	}
 
-	o.replyFunc(o.ctx, writer, eventInfo)
+	if shouldSkip {
+		// Trigger a redelivery
+		writer.WriteHeader(http.StatusConflict)
+	} else {
+		o.replyFunc(o.ctx, writer, eventInfo)
+	}
 }
diff --git a/test/test_images/recordevents/main.go b/test/test_images/recordevents/main.go
index 38445c45bc8..686b10f4c00 100644
--- a/test/test_images/recordevents/main.go
+++ b/test/test_images/recordevents/main.go
@@ -18,8 +18,6 @@ package main
 
 import (
 	"log"
-	"net/http"
-	"os"
 
 	"k8s.io/client-go/rest"
 	"knative.dev/pkg/injection"
@@ -27,7 +25,6 @@ import (
 	_ "knative.dev/pkg/system/testing"
 
 	"knative.dev/eventing/pkg/kncloudevents"
-	"knative.dev/eventing/test/lib/dropevents"
 	"knative.dev/eventing/test/lib/recordevents/observer"
 	"knative.dev/eventing/test/lib/recordevents/recorder_vent"
 	"knative.dev/eventing/test/test_images"
@@ -49,24 +46,7 @@ func main() {
 		recorder_vent.NewFromEnv(ctx),
 	)
 
-	algorithm, ok := os.LookupEnv(dropevents.SkipAlgorithmKey)
-	if ok {
-		skipper := dropevents.SkipperAlgorithm(algorithm)
-		counter := dropevents.CounterHandler{
-			Skipper: skipper,
-		}
-		err = obs.Start(ctx, kncloudevents.CreateHandler, func(handler http.Handler) http.Handler {
-			return http.HandlerFunc(func(writer http.ResponseWriter, request *http.Request) {
-				if counter.Skip() {
-					writer.WriteHeader(http.StatusConflict)
-					return
-				}
-				handler.ServeHTTP(writer, request)
-			})
-		})
-	} else {
-		err = obs.Start(ctx, kncloudevents.CreateHandler)
-	}
+	err = obs.Start(ctx, kncloudevents.CreateHandler)
 
 	if err != nil {
 		logging.FromContext(ctx).Fatal("Error during start", err)