The only thing that worked ever with the O2 being tapped by the AEM's O2, was setting everything to -50% above atmospheric, 14 aPSI MAP, on the O2 map.
This gave me my nice smooth injector duty cycle and AFR, but even this was finicky and simply didn't work sometimes.
I did follow the instructional video but it didn't really work either. I tried using the offset mode as it instructs, and I could see a lower voltage on the OBDII scanner, but the lowest it would bring the AFR down to on the wideband was about 13.0, but never steady, it would bounce between 13 and 14. So to answer your question, yes, in closed loop mode the AFR will oscillate around 14.7. I usually see between 14.4 and 15.1 stock, and about a 1 second cycle between the two.
A narrowband O2 usually outputs .1V at 15:1 AFR and 1.1 at 14:1 AFR. The PCM is trying to maintain 14.7 in closed loop mode, which is actually around .445 V. The theory is if you want to lower the closed loop AFR you can offset the O2 voltage so the PCM thinks it's running leaner than it really is and adds fuel. The problem with our cars is that it isn't measuring the voltage, it's just testing to see if it's lean or rich.
So if you offset a 0-1V signal by .5V for instance, it will now oscillate between -.5V and +.5V. But -.5V is simply seen as 0V, and +.5V is still seen as rich since it's over .445V. This is why the behavior is finicky. As soon as the PCM sees a rich signal, it will start pulling fuel, and will continue to do so until the next cycle. So even with the -50% O2 table, it still was able to see a rich voltage and start pulling fuel, and reach super lean 16:1 AFRs under boost before the 4200rpm closed to open transition.
Due to completely unrelated mechanical issues I haven't had time to play around with the map since I switched it over to the Analog A IN/OUT. I think my goal will be to output a steady voltage that the PCM sees as stoich which should be around .445V, when in boost. This way the trims will be zero, and I won't have to worry about resetting the PCM and losing stored LTFT's. The PCM will just be going off the stock fuel maps, and I'll be able to alter them without the PCM trying to trim any of the extra fuel.
The only thing I am worried about then is that the PCM may not like seeing a static signal on the O2 line, but it would only be in boost and as soon as I let off the throttle it should go right back to closed loop and be fine. With all the playing around I've done so far I haven't seen a CEL for the O2 yet, so I don't think it's that sensitive.
This is one long journey. I just hope to get most of my task list done before it gets super hot again.