But in the final analysis, if I were in your shoes, I'd consider the many other options you have that would get you into a V-8 Mustang. You could swap a 5.0 drivetrain into your car, which is feasible. If you find a good donor car, you can swap everything-engine, trans, and rearend-into your car.
What about just getting another car? By the time you've done all the legwork and spent all the money required to rebuild your engine, you could probably buy another Mustang of that vintage for around $2,000-$3,000 in U.S. funds, and it would be a 5.0 to boot. Another four-cylinder car would be even less. Finally, if your car has been personalized to suit you and you don't want to completely replace it, you could seek out a good-running four-cylinder Fox and swap the engine out of that car into your '86.
Send your '79-'05 Mustang questions to: Late-Model Corral, 9036 Brittany Way, Tampa, FL 33619, or e-mail to mustang.monthly@primedia.com with "Late-Model Corral" in the subject line. Include your name, city, and state in all letters and e-mails.