It should be rich at WOT.......... BUTwont a bad O2 tend to read rich when its failing?

I should pull that puppy and take a look at..if its anything like John W'*....

Edit:
Just looked at plugs and the 02, they both look perfectly fine.

you can not allwas tell by looking at an O2 that it is bad, i would suggest that if you have not had it changed within the time you have had the car, then for what its worth you should change it and know 100% that its good

i changed mine last week , the old one looked fine but i notice much better MPG with the new one in

ofcourse i have changed my 02 before.
it has about 10,000 kms on it

My bet would be you are running lean.
But the other possibility, if the O2 is correct, could be that the extra boost pressure created with the 2.2" is raising the outlet temps to a point where the cooling is not sufficient and the engine knocks and retards.

Are you running with Ethanol enriched fuel?

O2 sensors when they get 'tired' tend to READ lean, and over-richen the mix, which is why decreased fuel economy is the first sign of failure most see.

What'* your fuel pressure again at idle with the vac line pulled?

vac line removed i do belive it will go to around 48-52 ish

That'* about 8 psi lower than I'm running.