I can't say for sure what the Subaru ECU is doing.  But I have done a
lot of reading about my '89 toyota ECU, which is of the same era.
Here's what my ECU does (in general).

It reads input from these sensors:

AFM: air flow meeter - this tells it how much air is coming in the
intake
O2S: oxygen sensor - this tells it how much oxygen is left in the
exhaust - gives it an idea of how rich/lean the mixture is
CPS: crank position sensor - this tells it where in the revolution the
crank is
Knock sensor - tells it if the engine is knocking
TPS: throttle position sensor - this tells it what you're thinking (how
fast you want to go)
Brake light sensor - this also tell it what you're thinking (if you
want to be stopping)
there are probably a couple other that i'm not thinking of right now.

By doing some math with these inputs, the ECU then tells the injectors
when (in relation to the CPS)  and how long to fire.  I have 4
injectors (you said you have 1) but my computer is so old, it can't
manage 4 injectors, so it actually fires the 4 all at once - it's
really no better than having the old TBI style like you have.

All the spark timing is done by mechanical means, and there's no
adjustment on valve timing.

So if you had a bad computer, or faulty ground, or somthing like that.
It's definately possible that the injector was being fired at the wrong
time, or not often enough, or anything like that.  That's enough to
make the engine run rough and fail emissions.

If you want to know more about what your computer is doing, I suggest
getting a factory service manual.  That will tell you in detail what
this specific computer is doing.  Anything else is just a guess.