04 GTS O2 Sensor Melted to Exhaust

So I just got this diagnosis yesterday. After doing all of my regular maintenance and the spark plugs on my 04 GTS, my mechanic was planning on replacing my o2 sensor. It's been tripping the Service Engine Light but up until recently would clear out all codes when he cleared it and not gripe while running. But when he checked it this time it started giving errors even after clearing it multiple times will running. So I decided that he should tackle that issue. He put goop all over it to loosen it up and I drove it around for a couple of days, but even after that the thing won't budge. Showed me his smashed knuckles from when the wrench slipped while he was torquing on it. After that he stopped trying because he didn't want to crack it and force me to replace the exhaust right now or have an extremely messed up car. Right now its only affecting my gas mileage slightly, maybe 3-5 miles per gallon less. I can feel it when the car is idling too, but its nothing huge.

I'm not all that familiar with the layout of my engine and exhaust but from what I can tell this is one of the o2 sensors that is near the exhaust manifold where its feeding out of the engine at the back of the bay, near the cabin. So it makes sense that its probably in one of the hottest areas of the car. So for right now its fine and he's going to look into how much it'll cost to replace that part of the exhaust. I'm not sure how complex of a job this will be, but it doesn't really seem like a quick fix kind of exhaust job. I'm wondering if I should even consider doing the stock exhaust again or if I should just save up my pennies and gut it and do a complete overhaul exhaust when I can afford it.

Right now my cars at a little over 153,500 miles and I'm seriously considering just redoing all of the exhaust to save me any more of these headaches, I already blew out the torque section of the exhaust and had to have that section replaced.
Has anyone else experienced anything like this before?