Well, the O2 sensor is required by the computer to determine how rich or lean your engine is running so it can make adjustments to fuel flow. So you could probably get away with only one. There probably isn't any way to hook up a second one to your computer anyway.
That pipe is the air inject pipe from your air pump system. If you are keeping Cats on the system, you will run that to both of them. Most likely the aftermarket cat will combine the function of the two Cats that are on there now. The combination Cat has ****** on the side of it for hooking up the air inject and generally comes with an adapter pipe to make up for the change in length. With a Cat on both sides you wil need to come up with a way to run the air inject to both. It would be a bit of work to do but definately doable.
Talk to a muffler shop about it, they may have some suggestions.
Good luck,

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