Posting back on my 2000 Subaru Outback Sedan with the issues I mentioned above. Last night I swapped out the O2 sensor and the car now runs GREAT! Problem Solved!
I should mention that the O2 sensor is not easy to get at in this car. You can't just put a wrench on it because you can't even see the base of the sensor and it's in a very tight spot. I purchased a O2 Sensor socket (has a "U" shaped cut out for the wire, about $10) for my socket wrench and even though there was not room to put the socket wrench on the end to turn the socket... this tool saved the day. The "U" shaped groove that runs down the length of the socket means that the profile of the socket is not a circle but instead a "D" shape. So I was able to use the sliver of space I had to put a crescent wrench right in the middle of the socket to turn it. Once loose I removed the socket and used a set of pliers to turn it the rest of the way. The biggest help was having someone on the top side holding the wire and turning the wire with the rotation of the sensor so it didn't get all wrapped around itself. From start to finish, it took about 30 minutes.
During the fix, I noticed that one of the rubber boots was torn on the drive shaft... so on to the next repair! Ugh!