I bought another o2 sensor, a genuine NTK 23400 from ebay that had been listed at $140 for $100 - the seller accepted my best offer
and my gamble paid off. I installed that sensor about 5 months ago and I've been getting anywhere from 38 - 42 mpg ever since. In city mpg is more around 36-38 but mixed driving usually gets me about 40 mpg.
I drove only on the highway 60-65 mph the other day and got a sweet 45mpg. On the other hand, if had I driven 80mpg the whole time, I would get around 33-34mpg. What works for me is to keep the rpm around 2500 and keep a light and steady pressure on the gas pedal to stay in lean burn as much as possible.