We present a nonsmooth output feedback framework for local and/or global stabilization of a class of nonlinear systems that are not smoothly stabilizable nor uniformly observable. A systematic design method is presented for the construction of stabilizing, dynamic output compensators that are nonsmooth but Holder continuous. A new ingredient of the proposed output feedback control scheme is the introduction of a recursive observer design algorithm, making it possible to construct a reduced-order observer step-by-step, in a naturally augmented manner. Such a nonsmooth design leads to a number of new results on output feedback stabilization of nonlinear systems. One of them is the global stabilizability of a chain of odd power integrators by Milder continuous output feedback. The other one is the local stabilization using nonsmooth output feedback for a wide class of nonlinear systems in the Hessenberg form studied in a previous paper, where global stabilizability by nonsmooth state feedback was already proved to be possible.