h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

The resolution to the dead-alive cat is quite simple once one defines the act of 'observation'.

(The multi-worlds scenario is unnecessary complication).

Observation in physics takes one of two forms: passive and active.

Passive observation, such as pointing a telescope at a star, has no effect on the subject - the light emitted by the star is the same whether the telescope is pointing at it or not.

Active observation on the other hand is the act of hitting something with something else to get a result. This is the only method available for obtaining results at a molecular/atomic/quantum level.

Active observation therefore requires interaction. And this is the important point: interaction does not depend on an observer, human or otherwise, conscious or otherwise.

So if one substitutes 'observes' with 'interacts' the issue becomes simpler.

It is not the observation per se which causes the wave function to collapse, it is the interaction (whether caused by active observation, or by other events).

So the upshot is that the wave function collapses the moment one particle interacts with another, determining the state of the cat.

A similar scenario is where a pencil is balanced on a very sharp point. The instant the pencil is released it initially falls in every conceivable direction. The wave function collapses very quickly, when the decisive initial interaction of one of its constituent particles with another particle (either another constituent particle or one in the surrounding environment) causing the pencil to fall in one direction.

Your right, "interact" is the key word. As one of my physics professors stated on the matter, it doesn't matter if the scientists actually observe the radioactive matter. The air molecules inside the box provide sufficient interaction to put the radioactive material into a definite state.
Imagining the reality of the paradox is difficult, since the paradox itself would require an environment inside the box where the radioactive material is free from any interaction of any kind.