If my baby was that shade of color for longer than a an hour or 2 I would be in the ER with him/her.
O2 levels should never go that low unless there is a valid reason for it.
I would be asking the GI for a reflux study/aspiration and also an appointment with a pulmonologist /ped cardiologist.
Please let us know how things turn out.
It sounds like your concern about the discoloration of your child's lips is legitimate if the pulse oximeter is accurately tracking his heart rate at the time and the oxygen saturation is below 90%. If your child's heart was felt to be structurally normal early in life, it is unlikely that the blueness is directly related to the heart. More likely it is related to either his GE reflux disease (? perhaps he is micro-aspirating?) or his lungs. He could potentially have high blood pressure in the lungs (pulmonary hypertension) secondary to the diaphragmatic hernia. The variations in heart rate (even a heart rate of 200 beats per minute) is likely a secondary response to the low oxygen level and not likely a cause of the blueness. You should follow up with pulmonary to see the status of his lungs and whether he has pulmonary hypertension. You should follow up with gastroenterology (GI) to see if his reflux is causing aspiration into the lungs. Some cardiac testing may be needed (ECG, echo) to help in the decision making.