it sounds like your maps tuned leaner than 15:1 which will cause cycling problems with a power fc and o2 feedback. basically with o2 feedback turned on and a lean map it'll inject off your base map, read lean from the o2, drop fuel in until it reaches stoich then lean back out to the map again. if its tuned properly just turn o2 feedback off, you can get better economy without it. or the other option is to use your wideband to simulate a narrowband but change the values so the ecu sees stoich around the same AFR's you've tuned for (eg 15.5:1).
as for the o2 feedback setting your correct, it simply sets the correction figure limit for using o2 feedback, meaning any cells lower than this number will use o2 feedback (under the right cruise conditions) and any cells higher will ignore it completely. I usually just set it to around whatever figures are on the map in the area where you start going from cruise to light boost, usually around 14:1