I've been following this thread with great interest.
I don't think a bad HO2 sensor would cause surging like you described.
When you pulled the fault codes by shunting the service connector, did you get any codes at all? When you get the motor back, I would pull codes again.
I know you said you triple checked all vacuum hoses, but I would consider hooking up a vacuum gauge at several locations. Several of those vacuum hose locations are pretty obscure and a small split or hole can be hard to find. On page 5-3 of the Helm shop manual there is a diagram of the entire vacuum system. Looking at that, two things immediately come to mind - is the fuel pressure regulator operating properly, and does the vacuum tank have good connections, and holds a good vacuum - i.e. no pin holes. If you don't have the manual, send me an e-mail at
[email protected], and I will try to make a copy and send it to you.
Speaking of the fuel pressure regulator, if you have or can find a fuel pressure gauge, you can hook that up by removing the fuel check service bolt, and check the fuel pressure while the engine is running. It should be between 41 and 48 psi at idle, according to the manual. Be sure to tie off, or plug the vacuum hose first. If that checks out, then it seems that would indicate there is likely a problem between the HP fuel pump and the injectors. If pressure is low, or shows variation, then back up through the fuel system. Pay special attention to the fuel line cut-off solenoid to make sure it is working properly.