Well, I have almost an identical problem, except I get a 34 code for the IAC after the idle smoothes out. Only 08+ bikes have IAC's though.
I replaced my IAC, checked the wires, and no results, it is only connected to the ecu. So, I bought an ecu today, but think it might be the o2, picking one up this weekend....
Good luck, and hopefully you can figure it out. I will let you know what I find with mine.