The oil loss is probably oil burning and getting into the cat. You need to replace the cat, but not doing anything to finding and repairing the cause of the cat failure, will result in the cat failing again. Oil, coolant or fuel geting into the cat will kill it. Excessive carbon will also cause a cat to not work.
The broken pieces are causing a restriction in the exhaust system, creating excessive backpressure. Making the engine run hotter and probably doing damage to the valves.
The cat is a component that is made from ceramic and microscopically coated with precious metals. The bad gasses chemically react with the gasses to eliminate the majority of them. When the contaminates such as oil coat the converter, it superheats and breaks down. That excessive heat you feel is very well likely from the cat. This really should get taken care of before engine damage, or fire results.
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Wednesday, July 16th, 2008 AT 4:45 AM