My plan is to remove the cat alltogether in my 96 1500, my question is:
If I reinstall the o2 in the exhaust (without the cat) will it set off a MIL.
There are two o2 sensors, one in the cat, and one in the tailpipe before the muffler. I plan on replacing everything from the collectors to the tips, and reuse the o sensor in their stock locations.

most likely. might get lucky and not .

You will either get a cat inefficiency code or a code for bad 02.

Will you be using it for off road use only?

It is very posssible you'll be ok. A lot of people do it with no probs. The downstream one is the one that will be effected most. If you do get a light you'll need an 02 sim, or some people use a sparkplug non-fouler.