Dave - I think you'll find the LM1 is a pretty useful piece of equipment, but you are correct in that the placement of the O2 sensor is key. Hanging it in the end of the tailpipe won't do the job.
I tried a mounting point much further downstream on my CRF but didn't have as much luck. About 12 - 18 inches from the exhaust flange seems pretty workable.
welding a bung in everyones pipe isnt really feasable for our purposes, but it is obiously the best way and i might put it on my bike. the thing that they sent with it kind of relies on a venturi effect to suck exhaust through. I will take a picture of it. It did seem to work when i stuck it in the pipe of my truck just for kicks, maybe cause of the smoother exhaust flow.