The recent 4th discovery of gravitational waves where the black hole masses were 31 and 25 times the mass of the sun, and they released 3 solar masses of energy as gravitational waves, made me wonder what would it feel like to be orbiting this binary black hole system on a planet at 1AU when the merger happened?
It could do serious damage if things were just right.
Three solar masses of energy is about 5x1047 Joules. 1 AU is about 1.5x1013 cm. The area of the sphere is thus about 4x1027 cm2. That's a flux of 1020 joules cm-2. That's plenty of energy to do damage...if it can couple to you.
The strain of the GW measured at Earth is around 10-22. Strain drops off as the inverse distance, and the ratio of a gigaparsec to an AU is about 1014, so the strain at 1AU from the merger would be about 10-8. By itself, this would probably not harm you.
But it's not a simple one-time strain, it is oscillating with the orbital frequency of the merging black holes, and anything which had a physical resonance at that frequency could pick up energy, possibly significant energy, from the GW fields.
(Note that this depends on orientation. The mechanical resonance needs to align with the GW, and GWs are not emitted in all directions, so you'd want (or, perhaps, not want!) to be in the plane of the merger.)
The argument that GWs can't deposit energy is plainly wrong -- if it were true, LIGO couldn't detect them! -- but if you believed that, you were in superb company: It took Einstein decades before he became convinced that GWs actually carried energy!
It is quite beautiful to imagine such a condition.
First thing is that we can't observe them with eyes, as no reflection of light will occur from black holes.
When the observer is in rest relative to merging black holes: now when the black holes are merging, the surrounding space-time's gravitational waves will start increasing, and their amplitude will also increasing. It affects the observer, because the waves start pushing away the observer from the black holes. But it doesn't effect the images of the observation, because light will also bend in the gravitational waves. Also time dilation will occur due to the gravitational waves, but what actually happening when they were merging, I can't imagine.