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If you want to save money you can use a generic oxygen sensor. I used to buy Ford Mustang 5.0 oxygen sensors, cut off the Ford connector and solder on my connector. The Mustang 5.0 oxygen sensors were less than $20 back then. Make sure you do it right and solder it and heat shrink wrap it. Saving money doesn't have to = ghetto.
Wow they actually check all of that during the emissions test in Cali? That sucks!!!
It's a pretty basic inspection. The bi-annual inspection they do in Japan is 70 points IIRC. They put a rig on the headlights to test the aim and lumens, they drive the car on rolls which you have to be able to stop using the brakes. They check the alignment too. If you fail one point and have to come back, they get stricter and start checking the dates on your fuel and brake lines. They have to be replaced every 2 or 5 years IIRC.
Cali is a flat out pain in the butt, but a 70 point inspection every two years is a whole different level to deal with.
California is actually more strict about the emissions from what I've heard. You can actually swap engines, do roll cages etc in Japan too, it just has to pass emissions and safety. I've heard that stuff is a total no go in California.