Installing my headers, and when I disconnected the passenger side O2 sensor harness I noticed a slice in the insulation. From my scanner readings it seemed to be working ok last I checked, so do you think it's not shorting out, can it? I really dont want to cut it and reconnect it, so should I just put tape over it?

 

Try to repair the insulation. If the wire is not frayed or broken, it will work unless it touches something and grounds out. You might consider a piece of heat sleeve or something to protect it further after you repair the insulation.