That doesn't sound correct. I remember having to remove the Y to remove the transmission, not the other way around. (The part that runs between the exhaust sections, across the crossmember, blocks the trans bellhousing from going back too far). Plus, I reinstalled the Y after the transmission was totally bolted back up to the block. But, whatever, you got it done!

When I did my O2 sensors, I was relieved that my front one came out easy and suprized the rear (post cat) gave me the trouble (stripped the bolt-head portion of the sensor, ended up having to use a torch and a pipe wrench to break it loose)

 

Yeah I didn't think it sounded right either... thats why I didn't have them do it lol. I myself tried pulling it out, but it wouldn't pull right back, and it would bind on the bellhousing or the front driveshaft. Also i see you have a 96, i know after 92 (what i have) they went to a smaller exhaust manifold, and I think I read somewhere that the Y pipe got smaller with it. IF so that extra 1/4" or so off the diameter might make the difference, I know it was just a small amount, but still couldn't pull it. Is yours 4x4? that could also make the difference.

 

Chrysler dealerships have an official $7 spraycan called "Rust Penetrent" that works amazingly well as a penetrating fluid... especially on O2 sensors

try to take a bit more effort to locate a oxygen sensor
made by the NTK division of NGK
instead of the Bosch units

 

That's right, I forgot about the size differance. That could make a differance with how easy (or hard...) it is to get it out. (The NAPA site lists the 1992 Y-pipe as having a 3.0" OD outlet, while my 1996 is listed - and is - 2.5" OD outlet.

As for what HankL said, I read somewhere else to get NGK/NTK O2 sensors if possible. I replaced the OEM sensors on my truck with them, granted, I didn't notice a differance in performance, gas mileage, or anything, but it was worth a shot.