exactly. The circuit is not removing the neccesity of HAVING a lower O2 sensor there..
The lower o2 sensor measures the amount of fuel in the exhaust, AFTER it has passed through the cats. The cats will remove most and thus, the reading by the lower sensor should be lower, and smoother (not as rapidly swinging from each pulse of ignition).
When you remove the cats for headers, or gut the cats the lower o2 will simply see the SAME thing that the uppers do. This, to the PCM, indicates a failing/failed cat and triggers the CEL. This circuit takes the rapidly swinging signal that a lower O2 will see with no cats there to buffer the exhaust, and simply.. buffers it for you.
Its like placing an electronic catalytic converter after your O2 sensor but before the PCM. End result is the same.. your PCM still sees a slower and lower signal than the upper o2 sensors see and thinks that your cats are working fine.