i have the same problem in my 97 dakota, except its with second gear,
it only seems to do it when everything hasnt warmed up yet.

No....  it's most definately not an O2 sensor...

It could be that the front band is out of adjustment, and letting the front
drum slip under higher engine power.  It could be a faulty TPS sensor,
thinking you're at WOT, and letting the engine wind out in 1st.  It could be
a mis-adjusted (too-tight) TV cable, delaying the upshift because of higher
line pressure.

Check the band and TV cable adjustments first, because they're mechanical
and easy to check.  If that doesn't do it, back-probe the TPS with a
multi-meter (analog preferred), and check the output voltage in reference to
the throttle position - see if it's incorrectly reading WOT at a partial
throttle setting.

VSS

replace it and get on with life