I think I'll be a little annoying and pretty much ignore most of what's already been posted in favor of getting a couple things clarified and commenting a little.
Does materialism spell the end for scientific method?
Given that materialism and the scientific method rather seem to work very well together in general and, given that they have rather different base natures that nearly cannot actually be in conflict in the first place... probably not. The end for the scientific method probably wouldn't come even if it were that reality blatantly isn't actually in line with philosopical naturalism, so long as methodological naturalism, which is what science actually is, was demonstrably useful. The end of the scientific method, in other words, will come when methodological naturalism is demonstrated to be ineffective.
Incidentally, I generally don't consider myself a materialist, specifically. I generally prefer to call myself a methodological naturalist.
I've been pondering this question for some time.
It's good that you're discussing it, though it's quite worth remembering that when one ponders something like this, it's very easy to get into a rut, especially when you don't have relevant information that others could provide, and ruts can be hard to get out of.
It looks like this...
* At least 99% of modern scientific research into the brain points directly to it being the sole source of consciousness. Pretty much every aspect of conscious experience has now been tracked to brain activity.
* Consciousness emerges from brain activity. It's what neural processing actually looks like, actually is.
This would seem to be rather dubious. Would you kindly back up why you think that neural processing is inherently what we normally consider consciousness? Neural processing is certainly extremely important for consciousness, but under most of the versions of consciousness that I recall, there's a general distinction made between conscious and unconscious. If you actually are trying to lump everything together completely, one of the consequences is that the version of consciousness that you're talking about... just isn't particularly useful for anything.
* If the brain is the source, or foundation, for consciousness then there cannot actually be an observing self.
An observing self? For what purpose and of what nature seem to be points that you're conveniently ignoring here. This particular "cannot" seems to be rooted in little more than your lack of understanding of the relevant concepts.
Though it's a pervasive and convincing phenomena it can't be real, or we'd be back in dualism.
This seems little more than a basic flaw in reasoning. If a rock is rolling down a hill, is the movement real? According to what you're arguing here, it's not, which honestly should get you to at least step back and more carefully consider how you're wording things, which, ideally, should help you understand things a bit better. In more normal usage, the movement is certainly quite real, after all, and is very certainly part of reality, even if it is not a particular object.
If we tell a materialist that they're going to be painlessly and instantaneously killed, and replaced with an identical copy, in theory they should be OK with it. It seems like something is going to be lost - them - but materialist logic dictates that this cannot be so in reality.
And... this would be flawed logic, again. An easy problem is that you didn't actually say when and where they would be replaced by an identical copy and what the consequences from the death actually were. There's a lot of leeway for very reasonable objection in your scenario. Going past that, you're treading in much more subjective territory here by the very nature of this, which further reduces the meaningfulness of this argument.
* This seeming presence of an observing self is likely therefore some highly favoured illusion resulting from millions of years of selective pressure. It's useful primarily for evolutionarily favoured tasks - finding food, shelter, sex, and avoiding predators.
Incidentally, this is still rather irrelevant to how you're trying to use it.
* If selfhood is merely a highly favoured illusion then what does this say about some of the cornerstones of scientific method, principles and techniques used to determine the truth about things?
Pretty much nothing, given that the only ways that illusion could possibly be accurate here could not impact the scientific method at all, given that they can be considered to have been taken into account from the start. At best, all you're actually doing is referencing the fundamental uncertainty when it come to how accurately subjective perception describes objective reality, which affects all methods of trying to understand reality equally and so cannot be validly applied to the scientific method alone, like you seem to want to be effectively doing.
Surely perspective is finished.
No. Only fundamental misunderstandings of various things could lead one to this conclusion with the concepts you've presented.
Objectivity must be in quite some trouble if there is in reality no subject.
No. Only fundamental misunderstandings of various things could lead one to this conclusion with the concepts you've presented.
Separation - got to be an illusion.
No. Only fundamental misunderstandings of various things could lead one to this conclusion with the concepts you've presented.
Distance - sounds dubious.
No. Only fundamental misunderstandings of various things could lead one to this conclusion with the concepts you've presented.
These concepts, so much the bare bones of our daily existence, must just be artifacts of our hunter-gatherer past, not reflections of reality. Even empiricism, perhaps not blown away, but surely weakened now.
No. Only fundamental misunderstandings of various things could lead one to this conclusion with the concepts you've presented.
Materialism - could it spell the end of science?
Such is very highly unlikely, given the inherent natures of materialism and science.