Camry :: 2002 - Lurch A Bit When Driving

I have an '02 Camry XLE (1MZ-FE) with around 175k miles on it. I've never done any transmission maintenance on it until recently (I was one of those dopes who believed my mechanic when he told me that the fluid didn't ever need changing).

A couple weeks ago, I started noticing a bit of a lurch when I was driving. It wouldn't ever affect the RPMs or anything and it was only ever an instantaneous thing so I didn't let it bother me too much. About 3 weeks ago it started getting worse and rapidly deteriorated into a problem. The engine started doing it in idle and it would happen numerous times (sometimes, when I'm driving in the city, it happens as many as 3 times a minute or so).

I immediately attributed the problem to the transmission and did 2 drain and fills with a synthetic fluid that's rated to meet Type-IV WS standards. The problem hasn't gone away, so either the problem in the transmission is a lot worse than I'd hoped, or there's something else wrong.

I ran an OBD-II code reader on it and have been getting an O2 sensor code. I was planning on replacing both of the O2 sensors to see if that fixed the problem. I was thinking that the lurch that I was feeling was just engine misfires caused by the O2 sensors sending bad info, leading to the engine running lean (the engine hasn't been overheating).

Either way, I need to put in new O2 sensors, but yesterday while I was driving to work, the engine almost completely stopped supplying power. It kept running, but no matter how hard I pushed the pedal, the vehicle wouldn't move any faster. I pulled over, turned it off, and turned it back on, and it worked again, but the VSC and traction control lights went on.

Does this sound like a transmission problem, or is there something in the ECM that would cause these kind of things now that the O2 sensors have gotten so bad?