Disconnecting the o2 sensor isn't going to help anything, but may put the ecu into limp home mode. You need the o2 to run properly, especially after engine warm-up when it goes into closed loop fueling.
The 3k RPM rev limit and backfire is an obvious sign of that. Limp home mode usually fuels the engine stinky rich for conservative engine safety.
So you haven't mentioned if this behaviour occurred before converting to 4WD...?
Have you checked the coolant temp sensor for the ECU? They're easy to test.
