2000 Check engine light fault code - smog test

My Od is due for smog so took it in to my local mechanic smog guy

The check engine light is on and his reader said it is code P0181 - which doesn't translate into any Honda code so he couldn't check it further and forwarded me to the dealer.
Before doing so, he did the smog pretest and everything is passing.
Meas %CO2 at idle and 2500 is 15.3, %O2 is 0.0 and 0.1. HC is 0 max allowed is 100. CO is 0.00 max allowed 1.00.

The dealer service says the code is saying the Cat is going bad.

This is confusing to me.

I can't pass smog with the light on, but the measurements say it good.

What do I do?

Does anyone know the codes - am I getting taken for a ride?
Dealer says $835 for cat replacement. Can a generic muffler man do this job? Are Honda Cats proprietary or can generic (NAPA, Flowmaster, etc) be used?

Thanks


Edit:

came back from dealer. Their Code was P0240 CAT DETERIORATION
they will replace for $830.

Went to a local muffler shop I used before and he said there is no aftermarket cat so would have to get it from Honda.

Went to another muffler guy I have used in the past...he did the job for $400...looked aftermarket to me.

Checked online a bit now and see that this P0240 code is quite common from 85000 miles and up. Also talk of EGR and oxygen sensor trouble associated with it.

My question is if there are all these possible emmision problems, why do all my numbers pass.

I think there is a load of crap going on.

I am in California, but while searching I came across a reprt from the NY emmisions board 2004 I/M Emissions Test Failure Rate Report http://www.dec.state.ny.us/website/dar/beim/failrate2004.html and the P0240 code is the most frequent one that happens.

Sounds like a great money maker.