[mwebb]

...."
If O2 sensor ?sees sees a bit less NOx, due to results of a cooler & denser EGR inert volume, then (perhaps) it knows it can advance timing more (more MPG)?...."

the 02 sensor does not / can not see 02
the 02 sensor measures presence of combustibles

despite the name

the 02 sensor has no (direct) authority over ignition timing
the 02 sensor does have authority over Air Fuel Ratio and has authority over weather or not the system will be in
"closed Loop" as with no input from the 02 sensor
(or the AFR sensor in later systems )
the feedback needed to confirm actual AFR is not present .

a better name for an 02 sensor is
Lambda sensor
since 02 sensors change state at Lambda ,
they either report leaner than lambda or richer then lambda
so the system will always be in flux , slightly lean to slightly rich of Lambda
never stopping at Lambda
Lambda = AFR of 13.64 to 1
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NOX sensors are used in later Diesel systems
______________________________
EGR improves FE by reducing combustion chamber volume
by diluting incoming air fuel mixture with INert gas
while EGR is active
effectively reducing engine size and suction throttling loss because throttle must be opened more to provide the same amount of
go

the gas pedal is really an
air pedal