it is 100% legal to swap in any engine the same year or newer that the car was offered in in the first place. Go ahead and do the swap, just retain ALL the original 5.0 emission stuff, you will need to go to a referee to get it inspected and passed--no big deal here.
However, I really wouldn't suggest this swap. You can get a nice 86 gt now for almost nothing, and save yourself all the work--either way, good luck.
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Jeremy
1986 Mustang GT Convertible
1972 2 door 302 Maverick
1994 POS head gasket clubbed broke down T-bird with $6000 left to pay off
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