Can you say that? Yes. Is it idiomatic? Not really.
First off, if you are meeting people you met before, but it's been some time, you get reacquainted with them. Getting acquainted is for a first meeting.
I was recently reacquainted with my high school English teacher, now long since retired.
By observation makes perfect sense, but in this context, it feels more natural to use the verb "to observe", or "to watch".
He wasn't much of a party person, so at every gathering he would always stand around and watch/observe everyone from some distant corner.
Lastly, in the process of is a bit formal here. It sounds like you're a scientist running an experiment.
Ah, I am not being anti-social; rather I am in the process of observing the various interactions of the male and the female of the species Studentis collegius when copious amounts of ethyl alcohol are introduced to their diet.
All together, it might be more natural to say:
I'm just going to watch everyone and get reacquainted with them that way.