Would a worn ignition key cause the theft system to go to passlock mode so the vehicle won't start this vehicle is a 97 olds?

The thing that causes the PASSLOCK to activate is the chip, if you will. If the chip is bad, ar is unrecognizable to the system, the PASSLOCK will activate. Take it to a dealer asap.

You can bypass the passlock by accessing the ignition, and cutting the yellow wire of a small 3 piece wire set that's on top of the ignition.

cut the yellow small wire from ign. switch in the column up by the switch. this is the passlock wire.