Patrick- Gary's "fix" is to quiet the signal from the knock sensor, b/c Subaru's TSB identified certain 97-98 ECUs that were overreacting to the signal from the knock sensor and drastically retarding the timing. The result is a low-mid range hesitation or flat spot, around 2K rpm.
His suggestions are to a) put a couple rubber donuts or other material betw. the knock sensor and the block to dampen it or b) splice in a home-made resistor, which he sells. I've used b) w/ no problems whatsoever, before that I had to re-set the ECU every week.