Poor fuel turned into worse problems with O2 sensor replacement. Help please?
 

I have an '04 that I purchased about a year ago that had 25,000 miles. The engine was replaced at 20,000, just before I purchased it. I replaced the plugs, wires and coils for preventative reasons. Roughly six months ago, I started getting extremely poor gas mileage. About 150-170 miles per tank, or between 8 and 11 mpg. I took it to a shop that recommended I replace the plugs. They only had about 7,000 miles on them, but I did it anyway. Didn't fix the problem. I then went to a Mazda dealership and after two days of diagnostic, and telling me that it was the best-running RX-8 they'd ever seen (compression, etc), they told me that my upstream O2 sensor was sending one constant signal, not changing depending on conditions which made it run rich. I replaced the sensor and the problem got worse. I popped 3 OBD codes, each of them twice: p0172, p2096, and p2196. I called the dealership back and they said that the new sensor is sending the correct signal now, but the cat is probably burned out because the car had been running rich for so long.

I have already spent $300 on this problem and am not interested in spending another $500 on a cat if that is not the problem. Does their analysis sound correct? Any and all feedback is greatly appreciated!