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There's your problem. VSS and IAT would have no effect on idle or driveability, the VSS does nothing but send a speed signal, it can unplugged, removed, set on fire, etc. and have no bearing.
Same for the IAT, diagnositics use only. You can dip it in ice, burn it, or crush it to powder, the car doesn't care.
Knock sensor though does matter, and when the ECU reads a knock signal it will pull timing all the way out and run open loop. That would be the hesitation problem.
The idle problem is more than likely a vacuum leak, as a defective IAA would raise the idle to 1800 or so, a defective IACV would not allow it to idle period.
If the car is indeed starting in 2nd gear, adjust the inhibitor switch on the transmission and/or check for A/T codes through the diagnostic procedure outlined in the FSM.
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