A catalytic converter isn't gone until the fat lady sings.
Aside $700 seems a little high unless they put the OE in.
An after market with CARB approval should run about $300 +/-

There is a number missing, what is the CO content in your exhaust.

As it looks from where I am sitting, it may just be the O2 Sensor.
When was it replaced last time, long or short time ago?

In some cases one can simply visually inspect the O2 Sensor and determine if it needs to be replaced.
If you visually inspect the sensor, look for thick or any carbon deposits. Some people are successful in removing it by using some cleaning solvent. It may work, but you don't know if the cleaning also made the response time faster.

There are some other tests that involve other equipment, but are, in my opinion, mostly inconclusive.

A O2 sensor can put out the correct voltage, however could be slow in doing so! That's why I don't believe in DVM tests, these are good for approximate testing.

The vacuum to the EGR is only applied if the engine RPM is more than 2500RPM. I Could be wrong with the 2500RPM and it could be higher.
Simple test here, unplug the vacuum at idle and apply vacuum from some other source. If the EGR is working fine, then the engine should idle rougher.
If not, then the EGR pipe is probably clogged.

Also, make sure the smog test is performed according to book and not to a test station standard. Yes, there maybe different tests for one model that the station can do e.g. Dyno or no Dyno etc.

If the fuel ratio is getting closer to 14:1 the high numbers will come closer or below their limits anyway.
My best guess is that your CO is between 2-4% ? Just a guess.

__________________
Mostly, I don't know notin, I just know where to look.
I am looking back, to over 30 years in Electronics Design.
Electrons don't care if they move in a car, computer or relay!

95 W124 E320 M104.992 - Because, I love to repair, naaaah!
Over 221,000 Miles
Cheers,
Norbert