The 86's do have crappy heads and plus they have no valve relies in the pistons. You can do pretty much any mod besides cam. Not only because of speed density but because of the pistons. If you got a 92 block a cam is possible with mass air. I plan on running an E-303 in my 86 with-out mass air, since it's not gonna be a daily driver.
As for the chip, it depends if it was custo burn't or not. If it was then it will need recalibrated. I think, The off the shelf chips don't need to be.(not sure??)
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Mike
Sold my 88GT Aug Y2K
Just got T-top 86GT 11-18-2000