Nitrous can definitely affect the WBO2 reading. Small to average shots typically aren't too much of a problem, but the more nitrous you spray, the more likely you are to be looking at false readings. There's always some amount of unused nitrous that makes it out the exhaust, and the bigger the shot, the bigger this amount is. Kind of a "diminishing returns" deal. And nitrous oxide simply isn't a substance that O2 sensors are designed to deal with very well.
I would work off the spark plugs before I would work off the O2 sensor readings for nitrous tuning. As for what happened, I would have to say that if the wide band was still pulling fuel out, you were richer than the target a/f ratio in the N2O parameters screen. Were the a/f readings on the run that damaged the plugs similar to readings from other good passes?