Never intended to get you so frazzled. By the way...I am an engineer. You want a technical discussion, so here we go:
The most important grounding in your car is the engine to body and also the ECM to body.
In regards to the O2 sensor, the exhaust manifold is bolted directly to the engine, therefore, you have a ground path to the O2 sensor in the manifold. When you also have an O2 sensor on the cat, the ground path is the flange bolts from the exhaust manifold to the downpipe. As a matter of fact, the gasket between the exhaust manifold and downpipe is also made of a matrix.
What I have seen many times happen is that the factory ground straps never get reinstalled properly or they get left out, specially duirng an engine or transmission removal. When this happens, then you really have a problem. As an example, if you remove the coil mount on our engines, you will see close to 6 to 8 factory grounds that are bolted to the mount itself.
Another problem is the installation of high powered sound systems. The problem here is that you may exceed the capacity of both the alternator and battery. Seen this happen many times.
I used to have a neighbour that his kid had installed a sound system that would dim his headlights in the evenings. Hios dad assumed it was a grounding problem so they asked me for help; his problem was his car had a 60 amp alternator and exceeded the electrical load capacity. So, the solution was a 140 amp alternator and a high performance battery.
Also, be careful when installing higher amp/load alternators in your cars; when possible, try finding an OEM version of the alternator. Many of the aftermarket high amp/load alternators will create an EMI field, and you will experience interference with other equipment in your car, including the ECM. The higher amp/load OEM alternators have provisions to reduce EMI so other equipment will not be affected in the car. One example of cars with high capacity alternators are the police cars. They have high capacity alternators to runn all the equipment from lights to radios and computers; their alternators have provisions for prevent EMI so it would not affect the ECM, radios and on-board laptops.
Another example was when a friend once installed a MSD box too close to the ECM; the car started to throw codes and the car had a miss. I had him relocate the MSD box and all the problems went away. As you can see, the root cause of many of these problems is not related to bad grounding.[/list]