nvu

yup, swap out the trans. you mentioned noise was only in 2nd gear. bad diff would make noise according to speed of the car regardless of gear

That pretty much confirms it's inside the trans. Though, when I had 2nd let go on one, it broke off an entire tooth on the small gear only make a light clicking noise, and lodged the tooth in the center section. Draining didn't find anything, only taking apart showed the issue. Though with how old yours is, it might also be loose bearings causing enough slop to make that constant noise

In second gear, when you clutch in does the noise go away?

I vaguely recall sohc single port EJ22 is an oddball thing somewhere around 97 when they went from phase 1 to phase 2. Are the valve covers on the heads the old school ones that have "16 VALVES" imprinted on them? \ If it's an 99 ecu, it's probably not really meant for those heads, probably why performance is poor. Good and bad is ecu is fairly simple and doesn't care which block is in there. Swap in the 2000 block, it's what the 99' ecu wants over all. Or if your state emissions doesn't care, drop in an 97-98 ecu and it might fix everything; if the current block has good compression and no mechanical issues.

This only applies to side feed injectors on older subarus. I'm fairly sure your 2008 is top feed and bad orings will leak externally, you'll see fuel on the block.

Grab a service manual, print out the AC relevant parts and show your mechanic. There's probably a diagnostic checklist section too. https://sl-i.net/FORUM/showthread.php?18087-Subaru-Factory-Service-Manuals-(FSM)-Every-Model-USDM-EU

I don't think I've ever seen a car with front parking brakes so you should be fine on that aspect. Probably a good idea to remove any abs sensors from the hub beforehand to avoid damaging them. Also avoid overtightening them when installing. If you get both wheels off the ground, test the bearings. Hold onto the spring while turning the wheel by hand to feel any vibrations, they should feel similar on both sides. Unhook the sway bar links to get that extra clearance on lower control arms

Went to parts.subaru.com and clicked around. Got this part # 84930AE020 Not sure if it's the exact one, but click around. It's under the electrical section, headlamp. https://parts.subaru.com/a/Subaru_2002_Legacy-25L-AT-Limited-Sedan/_52016_6025843/HEAD-LAMP/B12-840-01.html

For testing, unplug the pcv hose to the intake and block off the port. That way you can rule out pcv related oil consumption. Did you have pictures of the cylinder walls before replacing the rings? If it was smooth and lost the crosshatching, chances are the new rings won't break in properly.

any smoke coming out the oil filler pipe?

Did you still have the back plastic cover on? Guessing a pebble wedged in somewhere for a bit then got spit out. The plastic cover can flex around while the pebble was wedged.

The tapers should be easy. Your fork looks a bit big, it might rip the old rubber but it should work. The pinch bolt on the knuckle that sometimes get so corroded it snaps in two. Inspect and be careful. Unlink the antiroll bar to make it easier to push down on the lower control arm.

Stop by an auto store and ask them to try reading it with their scanner. If they can, at least you know the wiring is good.

Other things to check in addition to whats mentioned above... Check the pedal assembly under the dash. Those years can get cracks in the pedal bracket. Remove and check the pivot pin itself for wear. I've long since replaced mine with a hardened bolt, washers and locknut. Is 2006 the a push clutch? The stamped fork tends to crack overtime. Hard to check though. Pull clutch uses forged fork and has no issues.

If it's the old school manual air, check the pressure sensor. It's somewhere on the condenser high line. Short it and see. The temperature sensor is some feedback transistor, you can't short it to test. Unlikely as it only cuts out when the temp is too cold. Unlikely the AC switch itself is bad, you can bypass it and force AC on by turning to full defrost. No idea where to begin with the auto climate control, never had to deal with one.