How old is your O2 sensor? That's something cheap to do, it's a regular-old GM-type single-wire sensor readily available at any auto parts store and (very cheap) on eBay. Access from the driver's side to replace the sensor; it's just forward of the cat, sticking straight up.
And I'm thinkin' that if you've got lots of miles and still on the original catalytic converter, it's probably hashed and could use replacement. A Most Excellent time to upgrade to 2-1/4" exhaust and cat!
There are emissions-enhancing additives you can put in your gas which might help. Or perhaps a nice load of Gasohol which should lean things out a bit!
You can check engine timing to make sure it's in spec. You have to disconnect the ESC (Electronic Spark Control) wire in the center console from itself prior to attempting to check timing, or you won't get an accurate reading. It's the only single wire in the console with an inline connector.
Regarding the poor driveability, you might try resetting your idle speed/IAC, and TPS voltage.
http://www.s-series.org/htm/how2/tpsadjust.htmhttp://www.4x4wire.com/forums/showflat.php?Cat=&Number=445449A new cap & rotor might also be in order if it's been a while.
Anyway, that's a start, if you don't find a solution post back with more info.
HTH...........ed
P.S. don't know if the "HP" listed in the emissions report is a code or not, but a stock 2.8 certainly doesn't have 213 HP!!!!! <img src="/forums/images/graemlins/lol.gif" alt="" /> More like 125!