The O2 sensor should be as close to the manifold as possible. The sensor needs to reach 600* for the system to go into closed loop.
If you have headers then use a 3 wire o2 and put it in the collector of one header. The 3 wire has a heater built in and gets the sensor up to temp quicker.
At no time should you move the sensor further away from the engine nor is there a reason to monitor all cylinders by putting it past the Y pipe.
The extra distance will cause problems due to the delay in signal from the sensor to the engine exhaust output.
Fuel Injection Moderator at BinderPlanet
Hamilton Fuel Injection
75 scout XLC 345/727/JPD300/3.73's/33's/4wdisc/hydroboost/EFI/OBA/OBW
1977 Innocenti 1001 (Italian Mini)EFI 1275/DIS