Hello all!

I just bought my first E34. Car info: 1990 BMW 535i Automatic
I'm experiencing a rather unique issue with the engine. Whenever the engine exceeds 2500rpm under acceleration, the CEL comes on and the car looses power. The code is 1221, which points to the O2 sensor. If the engine is kept under 2000rpm, there is no problem at all. I'm inclined to think that this is an issue with ignition, particularly spark plugs causing an incomplete combustion, in turn alerting the ECU that there is an excessive amount of unburned fuel in the exhaust gases. The engine tends to have a problem during warm up as well. Has anyone had such symptoms with worn spark plugs? I've already purchased new plugs, but can't test my theory out until the car gets out of the paint shop. It may also help to mention that if I back off the throttle and let the car cruise at normal RPM, the CEL goes out and the engine once again has power. Thanks in advance for any help with this issue.

P.S.: How often should the distributor cap and wires be replaced? I haven't been able to find any service information for these items in BMW documentation.

P.P.S.: Did all E34 models come equiped with the tilting passenger side mirror? Mine does nothing when Reverse is selected (mirror control in driver-position).