as a general rule, you want it at least 18 inches from the nearest exhaust port on the heads. i believe some companies say 24 inches.
a wideband O2 sensor will have a heating element so it really doesn't need exhaust heat to work properly.
it can not be installed behind the cats if you have them.
you can't have any exhaust leaks between the motor and the wideband sensor or it will throw the readings off. also you don't want an exhaust leak right behind the sensor, i feel at least 2 feet of pipe behind the sensor is enough for most motors.
one with a gage is fine, but i would recommend getting a wideband that you can also data log to a laptop with. its not the safest thing to try to watch a gage while your driving.
you can hook up a MAP sensor and RPM input and know where the motor is at during the range of acceleration and cruise by watching the log file after a run.
you can get a bung and have it welded into the pipe.
i think most people don't have a wideband because of the price, a good WB isn't exactly cheap. but they are cheaper than a cooked motor.
each motor is a little different, so the AFR thats ideal for one motor may not be optimal for another.
at WOT, its better to be a little rich than a little lean. without forced induction, starting around 12.5:1 should be ok and then work from there.
i've never messed with forced induction, so i don't know what you would want to start at with it.