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The car will run fine with a bad O2 sensor. Once the signal get out of range the ECU just ignores it. When running cold you would see no difference at all as it is as the ECU doesn't use the O2 sensor until the engine is close to normal operating temp. This is the case with almost ALL EFI equipped cars from the mid 90's and earlier. I've already covered this once... Unplug it, there should be very little difference. Your mechanic is either used to vehicles from the 60's or only new "plug it in and that neato machine will tell you what to replace" models.

Coil packs will cause intermittent misfires and if there's a break in the circuit they'll usually be fine when the engine is warm but falter when cold as the conduits shrink and the gap widens.

Have you checked the timing (both mechanical and ignition)? Have you inspected the timing belt? Have you diagnosed the transmission codes yet?


EDIT: There is VERY little which will put the ECU into "limp mode"... the only one that's really common is a code 52 or heavy knock detection.