What do the spark plug tips tell you?
lean/rich, normal
It reads like you are running rich, from the MPG, of course, but also the comments about unexpected power when throttle plate is opened more, air/fuel mix gets to correct leaner mix.
First stop is always the fuel pressure regulator(FPR) on the fuel rail, it will have a vacuum line attached, check this line for fuel or fuel smell.
FPR diaphragm can crack and fuel is sucked into engine causing a richer mix.
The 1989 2.9l has a MAP sensor I think, it will be located on the firewall passenger side behind the wiring.
It will have a 3 wire connector and a vacuum line, remove the vacuum line and check it for cracks, make sure it can hold pressure.
Also check connector contacts.
The MAP sensor reports intake vacuum pressure to the computer, the computer uses this info to base air/fuel mix ratio.
O2 sensors can only be used after engine warms up, they need to be at 650degF or hotter to work correctly, so cold engine start wouldn't see O2's being used for at least 5 minutes, warm engine starts are delayed about 1 minute, computer uses a timer.
The fact that the Cats were collapsed could mean a rich mix for awhile which could foul the O2 sensors as well.
O2 sensors tend to fail "lean" so computer would run engine richer than needed based on older O2 sensors that are failing.
The O2 sensors use a chemical reaction to detect Oxygen levels so they do simply wear out when the chemicals are gone.
On a side note, my 4.0l was running rich, I found one of my O2 sensors was coming unscrewed, so air was being sucked in causing a higher O level, which computer corrected by running richer.
FYI about exhaust systems, best exhaust systems create a "velocity" at the manifold pipes, this velocity actually lowers the pressure at the exhaust valves, so exhaust is pulled out when valve is opening.
This velocity is created by using smaller pipe into a larger pipe(collector), as the smaller pipes exhaust is dumped into the collector it's pressure drops, which drops the pressure in the other smaller pipes on the collector, like a suction effect.
This is where the "back pressure" myth comes from, people put on larger exhaust pipes and got lower performance????
"Engine must like smaller exhaust pipes so wants some back pressure" << the myth
The larger exhaust pipes lowered the "velocity" so increased the pressure at the valves!
This is where header design comes in, and it's above my pay grade

But the creation of more or less velocity in the exhaust system can give more or less power in certain RPM ranges.
This could also be why you feel the power difference only at higher RPMs, the velocity in exhaust system lowers the pressure at the valves only at higher RPMs