I just got a code p0420 on my 04 Legacy (86,000 miles). I know this points to the cat but is that definitive? Could it be a bad O2 sensor or something else? What are my options here? This is an unmodified daily driver, by my wife, so major mods are out of the question.

Ouch. I just got a new cat with that code under the federal emissions warranty, which goes to 80,000 miles. So you just missed that.

The cats just burn out after a while, and our smart friends at Subaru (and most other car makers, too) made them just good enough to get past the mark.

When it's cool, reach under and bang on it and see if there's anything rattling in the pipes. When they go bad, the guts degrade and flow downstream.

How's your gas mileage?