I used the splice in kind, I got them for like 2 bucks each off eBay. They worked great for a year while I had the Mac O/R H on there.
The rear o2's don't specifically modify the A/F mixture normally. The front o2's do that. The rears just monitor the efficiency of the catalyst (the converter) system, and report back to the PCM with its findings. However, if the PCM receives "not normal" results back from the rear o2s for a certain period of time, it will briefly switch lean, then switch rich, to test to see if the rear o2 sensor responds with the result the PCM expects. If it doesn't get the expected result back, the MIL comes on.
Basically, yes they are necessary. If the MIL is on, and something else goes horribly wrong, you'd never know, since the MIL was on already anyway.