“I currently have a Honeywell TH8320U and it has the S1 and S2 lugs for out door temp sensor Can I just turn the sensor off and terminate the end of the wires and install the Honeywell Home RTH9585WF1004 Wi-Fi Smart Color Thermostat,”
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Yes, you can cover the ends of the outdoor temperature sensor and leave them unconnected if you install the WiFi Smart Color Thermostat, which displays an outdoor temperature based on weather data from the internet. I don't think you'll find the WiFi Smart Color Thermostat to be much of an upgrade from the TH8320U unless you really want the ability to control your thermostat from a smart phone.
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