42 is the throttle sensor circuit (TPS) according to my paper copy of the '87 service manual. The full list:
11, crank angle sensor circuit (sensor in the dizzy)
12, air flow meter circuit (MAF)
13, Cylinder head/water temp sensor circuit
21, ignition signal missing in primary coil
33, exhaust gas sensor circuit (oxygen sensor)
42, throttle sensor circuit (TPS)
43, injector circuit
44, no malfunctioning in the above circuits
Later models added a few more codes, and, just to be annoying, moved the last three around. Later manuals list 43 as the TPS circuit, 51 as injector circuit, 55 as no malfunction. 42 doesn't appear on the later code charts, so I'm not sure why you're getting conflicting info there. I've found no reference to a fuel temp sensor in any W/D21 service manual I've gotten my grubby hands on.
A loose plug sounds likely. If you look into the plug (assuming your '87 uses the same electrical plugs as my '93), the female pin is formed like a rectangular C with the ends touching. I tightened up a few loose plugs on mine by sticking the end of a knife between the pin and the plug body and pushing those ends inward just a little to make them grip the male pin more tightly. This probably isn't the right way to do it, but the plugs felt much tighter afterwards, and the idle issue I was chasing went away, so I'm calling it a win.
There is a fail-safe that will drop the rev limiter to 2800 rpm. EF&EC-42 says it'll kick in if it's not getting a signal from the MAF sensor or if a fuel injector fails to chooch more than four times in a row under certain conditions, but the only mention of the TPS on that page is that the ECU fudges MAF data with TPS data if the MAF isn't working. So that's a little odd. Not sure what to tell you, but I'd check the MAF plug while you're in there, and pull codes right away if it goes into limp mode again. Good luck!