Headers/Downpipe
The downpipe is the plumbing surrounding #13 on the picture -- it goes between the rear exhaust manifold (#18) and the resonator (unlabeled, but just above the "< FRT" arrow).
Doug Thorley headers include this plumbing already. Here's a picture from the Doug Thorley web site:

So, to answer your first question ("Do the DT headers eliminate the downpipe or what?"), the answer is yes.
I use a universal Magnaflow catalytic converter as well as a Magnaflow catback like you've mentioned. I also have a DMH cutout installed roughly above where #8 is in the first picture.
I don't run a wideband O2 sensor, but I don't do a lot of tuning beyond what DiabLew helps me out with.
I hope that helps.
http://static.ls4store.com/static/im...stallation.png
Here's a picture I took of the headers before I installed them in my car; the headpipe on the photo seems longer than the prototype image..

In the stock configuration, the catalytic converter sits between the rear exhaust manifold and the resonator on the downpipe. During installation, you'll cut the downpipe off before the catalytic converter and weld it onto the headpipe off of the headers. The portion of the downpipe that you'll be using will have the flange to mate up with the resonator. You'll also need to weld the crossover pipe to the headpipe.
The position of the the cutout works well for me. If it were anywhere else, I imagine it would be even louder in the cabin than it already is.
As for working with a DiabLew custom tune, Lew will send you instructions on how to log data using your DiabloSport tuner. You'll collect some data, export it off of the tuner to a PC, then email it to him. He'll do his magic on it and email you back a custom tune. You then install the custom tune, test it out, and repeat the process. Lew's a great guy and he really knows his stuff, so I wouldn't hesitate for a heartbeat to go back to him for tuning.



