Observation (i) is wrong because the deflection of a compass needle by the current-carrying straight conductor depends upon the magnetic field around it. So, it is the magnetic field produced by the current-carrying conductor which deflects the compass needle. Therefore, if we reverse the direction of current flowing in the conductor then the deflection of the magnetic needle would also be in the opposite direction.
Observation (ii) is correct because magnetic field strength decreases as we move away from the conductor. So, the deflection would decrease too.