Kejtar --
The O2 sensor is supposed to be changed at 80,000 miles intervals. It may not go into a total failure mode at 80,001 miles, but by 120,000 it is probably going bad. I have no idea how far out of spec a reading has to be before the check engine light is triggered, but I'd guess you're running close enough to the limits to be getting intermittant faults.
Two experiences, both with the '88 (Renix): Many years ago I made the mistake of paying a dealer to do the TSB on cutting out the infamous C101 connector and soldering all the wires together. This, I was told, would correct a number of minor but annoying problems I was experiencing. It did not -- but a couple of weeks after getting the truck back I went in for my annual smog check ... and failed. Went back to the dealer and complained, they checked it out and replaced the O2 sensor. They said it wasn't bed after they worked on it, but "failed" in the two weeks before I went in for the sniffer test.
Being me, I kept all the old emissions test reports, so I went and looked at them. Don't recall which of the readings it was -- hydrocarbons, I think -- but I could see that for about 3 or 4 years from new the reading was so close to zero it didn't count, then for 3 years it steadily increased, until I failed. New O2 sensor and it was back to zero. So ... O2 "failure" is not a go/no go situation.
More recently, about a year ago I was noticing some very subtle "popping" (like small carburetor backfires in the old days) when I'd let off the gas to shift (5-speed). It took me awhile to correlate this with engine temp and operating mode, but I finally wised up, replaced the O2 sensor, and all was well. It had not gotten bad enough to make a huge drop in gas mileage, but it was bad enough that when I let off the gas to shift the O2 didn't register the change in mixture immediately, so it continued to inject enough fuel for a load while I was shifting. The extra fuel was igniting in the header or the cat, and backfiring.
Bottom line -- you need an O2 sensor.