how do people put obd2 engine into older cars? do you have to transplant the pcm and all the sensor'* as well? and what about transmission related stuff?

You have a couple of options.

Legally you can install any driveline that is same model year or newer (C.A.R.B. rules)

Now, OBD-II is an electronic control system style, not a motor. You can take a newer motor and still run it off an older system, which is what I usually do. There'* a few sticking points, such as drive-by-wire throttles on the newest of vehicles. By and large, these can be overcome. Most of the sensor are the same or at least similar so that the parts can be swapped out. Things like the Coil packs have gotten better over the years, but are still backward compatible (like dumping the Magnavox coils on older Bonnie'* for newer Delco coils)

What you are not allowed to do is strip the OBD-II system off a vehicle that was made from the factory with OBD-II. (legally that is..you can physically do it, just don't get caught) In other words, if you car is a 2000, you can't slap a 1994 PCM in it to ditch the OBD-II.

What most people around here do is transplant the entire engine, transmission, and PCM from a donor vehicle into their car.