The guage will bounce around as the computer is constatntly componsating for changing conditions. That is what the o2 sensor does is give feed back to the computer regurding fuel mixture so id adds or deletes as nesecary. under light load conditions it is hard for it to find the exact amount of fuel required as injector on time is already very little a few milliseconds. so it will go up and down constantly. So it can be used for tuning etc as that is what the stock computer uses it for. You also have to remeber that most O2 sensors are heated so they do not give acurate results until there internal heater has got them upto 600 degrees.
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