I'm still a little confused....is the FIRST CAT directly after the header? Meaning if i do go with a new header and downpipe the FIRST cat will be removed? Thus probably causing failure of inspection?

 

Yup that's where it is. Take it off, it'll still pass emissions. They only put it there so it heats up quicker on startup, lowering startup emissions. Will you get a cel? only if you have an O2 sensor hooked up to it, but that can easily be fixed. Look at the focus and the svt focus. The stock focus has the cat right after the exhaust manifold, the svt has a header and no cat up front.