On my '91 245 I got an inexpensive Universal Carsound cat and a cheap ($65) header pipe without a flange and had a shop weld the two together. I just drove there with the new header pipe I had installed, along with the back end already assembled in the back of the wagon. Whole thing cost me less than $200 total.
Sounds like the header pipe is on it's way out if the flange is gone, so you should get one anyway. The '91 shoild have a solid flange, not a spin-type
As for the O2 sensor, as others have said, you need it to make the car run right. You can compromize on exhaust parts to get by, but not on engine management parts.
I would not use a splice-in $40 sensor because they are very subject to fail due to the connection and how/who does the wiring (correctly), and it's worth it to get the OEM Bosch sensor for $115 at Autozone and just plug it in. There's also a very good chance your old sensor wiring is toast after an old exhaust like that
burned it up. Also, the '91 has the O2 sensor in the cat, so the cable is longer than other year 240's, best to get the one that fits.
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