i am building a 289 for my 66 mustang, and this is how it is being built;
the rotating assembly has been balanced
retrofit roller cam from comp cams
retrofit roller lifters from crane cams, these are link bar lifters and they are much more expensive than factory roller lifters
cast flattop pistons, you dont need forged in a street engine making only 300hp
world products windsor jr heads with 58cc chambers. the 351w head have 64cc chambers and you will lose a lot of compression pressure, and thus power. you will have a small net gain though because of the larger ports, but the money you will spend in have the heads machined, and ported, will buy you a set of the windsor jr heads ready to bolt on, and the after market heads will add about 50hp
a weiand action plus intake with a 4100 autolite carb mostly because i already have them
tri-y headers
duraspark distributor hooked to a chrysler orange ignition box. i have this combo in my 66 falcon and it works perfect.
if you shop around, you can find used world products jr heads for sale. look for the ones with the 1.94 intake valves. as for the cam, you dont have to swap to a roller cam. use a comp cams 270h magnum flat tappet cam to get similar results. if you dont have an intake yet, get a performer rpm or weiand stealth intake, and use a 600cfm edelbrock carb. if you spend wisely, you can get everything done for under $2k with little problem, and have an engine that makes 300hp easily. i prefer the 289 over the 302 as the 289 revs quicker and higher, and turns in better fuel economy.
as for the bellhousing issue, there are 5 bolt 289 blocks out there, but they are rare these days. from mid 1965 one ford use the same bellhousing bolt pattern on the 289, 302, 351w/c, 5.0. i would find a 5.0 bellhousing used with a T5, if you want a manual trans, and use a hydraulic clutch coversion. you can buy the brackets from
DazeCars, Ford Galaxie Mustang tech and restoration, and you get a list of the parts you need, and where to get them. for about $200 you can have a nice hydraulic clutch system that would normally sell for $500.