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I had the genuine RS one from a MK3 cup racer fitted on mine, with some slight modification.
No one was making them for MK2 at the time.
Definitely worth doing I'd say, you never know if it'll save the engine one day.
Bosch LS6046 is the one you want, don't bother with any other.
It should be switching back and to from 0.1v to 0.9v in a steady waveform on the graph view.
It is increasing slightly, but I'm not sure what the exact readings should be for a given rpm range.
O2 sensor is correct, it should be going up and down.