Does the light come on all the time?
I mean, if it comes on as soon as the ignition comes on, before the engine is started, it can hardly be exhaust temperature, right?
As I was recently told, the warning light is triggered by a temperature sensor built into the cat.
If the light's on all the time it sounds more like a damaged sensor than anything else.
Wonder if your MOT inspector was pulling and prodding at something he shouldn't have been?
The lambda sensor is what the ECU uses to monitor the mixture.
If the car IS running rich, and that's what's killed the cat, then it will need replacing.
I suppose your mechanic is just playing it safe.
He doesn't want to tell you to spend
£250 on a cat and then knacker it straight away by pumping unburned fuel into it, hence the new lambda sensor as well.
Looking at the sticky thread here all about MOT and Emissions, is seems a healthy MR2 should pass the emmisions even without the cat.
Bear in mind that if your MR2
needs the cat to scrape through the emissions test there's probably something else wrong and your cat isn't going to last long anyway.
Personally, if it was me, the first thing I'd do is have a look at the sensor attached to the cat.
If the sensor is okay
(no warning light at first but the light comes on when the engine gets warm) I'd buy a decat pipe for
£60, fit it and get the emmisions checked.
If it fails then I'd buy a new lambda sensor.
If it still fails after the new lambda sensor is fitted you need to think about what else might be wrong.
I'm in the same boat right now.
Bear in mind that a decat pipe won't
(apparently) have the fitting for the cat temperature sensor so you'll need to find a way of removing it or
(as I plan to do) wrap it in a bit of foam and leave it wedged in a corner under the carpet in the boot.