Does Mahayana Buddhism or any other school of Buddhism posit the idea that the physical world does not exist apart from an observer's frame of reference, as in everything exists only in the mind as imagination?
the idea that the physical world does not exist apart from an observer's frame of reference
This is agreeable for expression. As i understand it, the Theravadin texts posit this iow.
as in everything exists only in the mind as imagination
This is dodgy. Which is closer to what you are asking?
- That which imagines is imagined.
- That which imagines isn't imagined.
There is a fundamental difference and #1 is closer to Theravada. #2 would be disagreeable.
Dependent on eye & forms, eye-consciousness arises...
Dependent on ear & sounds, ear-consciousness arises...
Dependent on nose & aromas, nose-consciousness arises...
Dependent on tongue & flavors, tongue-consciousness arises...
Dependent on body & tactile sensations, body-consciousness arises...
Were someone to say, 'I will describe a coming, a going, a passing away, an arising, a growth, an increase, or a proliferation of consciousness apart from form, from feeling, from perception, from fabrications,' that would be impossible.
Ideation creates views. Ideation belongs to the domain of thought, which in Buddhism is defined to be one of the six senses, all prone to grasping and therefore suffering. The Buddha discusses the net of ideation/views in DN1. The Prime Net, which emphasizes how ideation/views can trap us.
When a mendicant truly understands the six fields of contacts’ origin, ending, gratification, drawback, and escape, they understand what lies beyond all these things.
Notice that, in the above, the Buddha points beyond all these things. The Buddha points beyond ideation. The Buddha points beyond views.
And this leads to a problem with a question that asks about "everything". It's a problem because "everything", which is literally "every" conceivable "thing", is a very slippery term, much like "infinity". Is everything countable? Some infinities are countable. Others are not.
The Buddha taught four Noble Truths. These truths all deal with suffering. In fact, the four Noble Truths deal with all suffering. They do not deal with "everything" unless we define "everything" as "all suffering". And in this one special case of "everything as all suffering", then yes, every thing is indeed suffering and there is also an end to suffering. Ideation belongs to the realm of forms. And the escape from forms is the formless, which lies beyond ideation.
DN34:1.4.27: Renunciation is the escape from sensual pleasures. The formless is the escape from form. Cessation is the escape from whatever is created, conditioned, and dependently originated.