opinions

[KiltedBanshees93GT]

OK, going by points,

1: Completly do-able, it will cost you a bit, as noted, so be prepared. The good news is that in doing the swap, you will be on the way toward addressing some of the other mods you're interested in. If you can find/buy a v-8 "parts car" you'll be a couple of steps ahead of the game. (even if its minus the engine/tranny, you'll be after the suspension and assorted bits)
289 and 302 are virtually the same motor, 99% of what you can do to a 302 can be done to a 289.

2: Skip 3 or 4 speed, and swap in a fox era t-5. Overdrive=Good. Several companys have adaptor/swap kits available. The only part thats harder to find (Unless you have the above mentioned parts car,with a stick) will be the pedal assembly. You can buy one of those from the mustangpartshouse.com. You won't need the z-beam stuff anyway if you convert to a cable clutch.

3:Parts car rebuild, finding a ford 8" shouldnt be hard, or have yours rebuilt with a posi unit. For stock or near stock 289/302, you shouldnt need more.

4: Depends on what you want. IMHO, a shaker might not flow right with the first gen lines, but I've considered it myself. Anybody got pics? For a scoop, you could always go with the shelby scoop, looks nice without being overbearing, just my .02

5: You'll already need to convert to 5 lug for the v8, while you've got the suspension apart, you can add anything from a mustangsplus grab-a-track kit to a TCP performance setup. Depends on you'r wallet.

6: Parts car/aftermarket kits can cover whatever setup you'd want, from stock drums to 4 wheel disc.

7: Whatever color makes you happy. Its your car It doesent have to be a shelby or 2+2 to have a nice paint job. As long as you're not planning on slapping badges on it, and calling it a cobra, thats just cheezy

8: Dual exaust is a must, if you're swapping to a v-8, there are pleanty of companys out there that can hook you up.

As to worries about "ruining" the car. First off, some basic truths.
Your car (unless very rare model/options) will never be worth the hard currency you invest in it.
This seems to be less of a rule lately, as some nice resto-mods are fetching a pretty penny too. Ultimatly the car will be worth the quality of work done on it.

If you're worried you may decide to go back to "concours" style restoration, all the above mods can be done without cutting sheet metal. Original can be restored, with a bit of work and all the original parts. And yes, to the hardcore, any mod is bad, I dont get it, but oh well...
Overall, IMHO, I think you should just look at what you want the car to do/be, as opposed to what you might get on resale and go for it.

Hope it helps,
J