The rear o2 sensor essentially measures the efficiency of the catalytic converter. By comparing the output of the rear sensor to that of the front sensor, the computer is able to determine the catalyst's efficiency.
If the rear oxygen sensor goes out of a predetermined range, the computer will store either a catalyst efficiency trouble code, or one related to the circuit/shorts.
Here is a great resource for learning about how the 1998 OBD2 system operates. Specifically, page 4:
http://www.motorcraftservice.com/vdirs/diagnostics/pdf/obdsm986.pdf