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2nd Gen Ram Tech1994-2001 Rams: This section is for TECHNICAL discussions only, that involve the 1994 through 2001 Rams. For any non-tech discussions, please direct your attention to the "General discussion/NON-tech" sub sections.
Use the one in the cat so you get both sides of the motor (assuming you are using a y-pipe). You can buy a plug for the hole in the header. The amount of oxygen in the exhaust will not change unless there is a hole in the pipe so it is fine to put the O2 sensor farther down the pipe.