
I ran into this same problem after messing with the engine's top end and piston rings.
Due to oil being pumped through the engine exhaust from suspected badly/poorly installed valve seals by the machine shop and rings that hadn't seated yet, it probably killed the O2 sensor in mine.
For the record, as the engine begins to tighten up and seal, I have gone through
three O2 sensors, and two Cats. Read somewhere that the Cat can sometimes be 'recovered' by soaking it in hot water and laundry detergent, followed by a good flush/rinse and blown out with compressed air. Did this with the one new, oil saturated Cat but haven't swapped it out with the second new one that seems to be still working. Once I get the engine running 100% one of the Cats will be throw-away and sold for it's precious metal content along with the 21-year-old original that should almost balance the cost of replacing the CAT twice.
As a systematic approach to figuring out if anything else was causing the engine to run rich, I replaced the temperature sending unit, ECT, TPS, IAT, MAP, O2 (third one) and the fuel regulator on the fuel rail. Guessing and swapping parts is never a good idea, but in the absence of good diagnostic tools it is an alternative as long as cost does not run away. All these sensors only cost about $70 US and since the diagnostic tools to read the ECM in real time do not exist anymore (except perhaps on eBay) I figured it was a good way to troubleshoot and eliminate as many root causes as possible.
I also replaced the coil at the same time. Engine straightened out and now runs reasonably well except for the oil puffing at start up that I hope to address on Monday next. One very important step is to check and shine up all of the grounds on the engine. On the 4EX1 there is one from the back of the intake to the right shock tower, and two on the thermostat housing for the ECM, finally one attached to the coil bolt as well. Shine them all, clean the surface they attach to and snug the bolts down tight. Also replace any vacuum lines as ours were over 21 years old.
Another thing I can share is that the Bosch O2 sensors seem to be a little more forgiving relative to oil or rich fuel mixtures. I have one in reserve (they cost about $10 USD from Rock Auto). I think they work better than NGK / NTK sensors too.
Finally, the ECT sensor is the center of the fuel and ignition system. If it is not delivering proper voltage signals to the ECM, the ECM will be all over the map concerning spark and fuel delivery. Even a good O2 will not be able to compensate for a rich mixture. Earlier Hyundai vehicles also suffer from this same problem.
One more thing, our 1991 has a non-heated O2 which means it will run open-loop until the O2 heats up. And the O2 can go open-loop at idle too. Most of the DOHC engines use a heated O2 so this should not be an issue.