I'd find out if the traction lock is a three or four pinion design.  The three pinions are kind of weak.  Granted on street tires the tires are the fuse (you'll break traction before shock loading the rear enough to break it), though if you ever hammer it into 3rd there is risk because you'll have traction at that point and something might go boom. 

If you already have a Toploader I'd swap the car to a T5.  You get a good overdrive ratio and keep it a stick.  The AOD has never been one of my favorite trannys.  Not a fan of autos in cars in general, but to each his own.

You need to match the rear gear to the trans.  For a non OD trans I would not go beyond a 3.25 or you won't be able to drive the car on the interstate without zinging the engine to 3,500RPM or more.  3.80s are a good match for an OD trans.  3.40s are also good, but you'll leave some acceleration on the table with only a tiny reduction in cruising RPM.
 

It's no fun having something stuck on the floor and for that reason I do not embark on more then one project at a time.It must be running other wise. I do not have a lot of extra cash either, So my projects are short and to the point. My car looks like a POS. My engine is a used GT40P I sold a set of Gt40P heads for $525 to buy a whole GT40P with engine, trans and all the EFI stuff for $450. Sold the stuff I didn't want for $175, Bought a used 91 Mustang 5.0 cam for $60, used Wieand Stealth for $80, used crane Cobra 1.72 rocker arms f0r $115, used Elelbrock 600 for $125. I have spent money on my suspension, full Street or Track tubular. It's a wide ratio Toploader 4 speed with a 2.80 axle. The car is dead nuts reliable, I don't worrk about paring lot dings or road rash. A couple weeks ago I drove 100 miles to Watkins Glen to do some auto crossing and drove home 100 miles after thrashing the car all day. and got about 20 MPG. I'd say my motor makes a little over 250 hp

This was last April at openind day of watkins Glen charity run. 3 paced laps that were suppose to be 55 MPH. My two friends behind me in their 66's said we were doing 90 mph at times, Did i have fun? You betcha!

Last edited by Huskinhano (11/06/2017 10:07 PM)

Hello mark , i m very a newbye in this world and this is my first resto of mustang 66 fastback .
i have not a lot to put on the table but i would like to share with you my experience with grip pro lsd that i put inside rear axle . i got t5 trans now .
The grip pro lsd i made ( as they refers ) for 8 and 9 inch ford diff . 
this is not totally real because i got to grind a lot the case inside all around the bearing and i believe this is not the right way to fix the problem. But there is no solution, 

without this work you loose the possibility to move ( the crown )  left or right to make a decent backleash.
Now i am far to finish the car and try this lsd diff  and see if was a good choice or not . 
for gears i follow tips here and i put a 3,89  ... i will see what happens 

For engine i cant say nothing but you have plenty of choice and if i were you i will put a 331 stroker