skiwesser - Yes, close loop is during idle and part throttle operation. During wide open throttle operation the EEC goes into "open loop" mode.
You cannot tune your cars fuel delivery with the EEC based on the stockish type O2 sensors. The standard style Bosch (etc) O2's are really only a basic sensor that switches between lean, stoichemetric, and rich for the most part. In a normally operating Mustang hooking an A/F guage to the O2's will simply indicate that the EEC is doing it's job and getting proper input from the O2's. With a dual gauge set up you will see the gauges toggle between each bank of cylinders on the engine (left side will go lean, while the right side will go rich, and vice versa). When you go into WOT you will see them both instantly (or should) go full rich. So, all it does is say the EEC's doing its business and fuel delivery is working basically.
In order to actually tune your fuel delivery via an O2 sensor input alone, you would have to replace the standard style O2 sensor(s) with a "wide band" O2 that can give full range A/F ratios. These are very expensive, at around $600 to $800 each, and are what the various EEC tuners using Mike Wesleys tuning software and chip technology commonly use... either on the street or on the dyno (the later is the ideal way to tune your vehicle.. i.e. an experienced tuner using wide band(s) in conjuction with a chassis dyno).
For those who would like to learn a little more about the EEC, tuning, and adaptive control I'd suggestion reading some of our older articles on the subject here:
Induction Blues,
EEC-IV Adaptive Control,
EEK vs. EEK, and others in our
articles section...