Stock high altitude initial timing increase is 6-7 degress higher per Jeep. A few high altitude service bulletins were issued stating this.
One states 6 the other 7, so as with any engine what works for one doesn't mean it works for all.
Play with it a little and see what works best for yours.
o2 sensor is probably fine where you have it...the angle they refer to it to prevent cold water/fuel from "shocking" the sensor on cold starts.
Biggest gotchas with them is an incorrect bung. Widebands are picky they need the correct depth to prevent fouling and keep accuracy.