Those are the factory original alignment specs for your car.  The Granada spindles will cause issues even with the V8 steering linkage, but if you have the I-6 linkage still in the car, the bumpsteer is probably terrible due to tie rod length mismatch and spindle geometry.

I have tried all kinds of alignment settings using Granada spindles, very seldom finding a happy spot that works well.

It will drive a bit better with at least 3 degrees positive caster and up to 1/2" negative camber.  Toe-in is a big issue because the spindles are steering themselves every time the suspension moves up and down.  As the car goes over a rise in the road, as the car unloads and goes upwards, the tires both steer TOED OUT.  As the car settles and compresses the springs, both front tires steer TOED IN.  Barring any worn out parts, the constant toe changes from the different steering geometry is most likely the culprit in your tire wear.

The problem can be lessened by installing V8 steering linkage on the car, but it will not be fully corrected.  By V8 steering linkage, I mean pitman arm, idler arm, center link, inner tie rods, outer tie rods and tie rod adjusting sleeves.  The V8 parts will be closer to the Granada than the I-6, but will still have some issues.
There are some Granada spindles available now that have correct geometry for a V8 65/66 Mustang.  If you had a pair of those and the V8 linkage, your bumpsteer would at least not be any worse than an original V8 65/66 Mustang.

going through this myself right now. i can verify what steve said about the toe-in on compression. i knew i had the problem already, but was surprised when i cut 1" from my front coils the other night and gained at least a half-inch of toe. upgrading to the V-8 manual setup in a couple days.

i'll pull the springs and run the suspension through it's movements and see what i end up with after the change-over. i hope it cures it, if not, i'll keep at it till it's as small as i can get it.

Scott wrote:

If it is the compression and de compression of the suspension would a better set of gas shocks minimize the travel?

minimizing the travel is a crutch. you could replace the shocks with steel tubing and eliminate bumpsteer alltogether, but it doesn't solve the problem. (obviously one should not attempt that!)
for a comfy street ride, you want as much travel as you can get with as little or no changes in suspension geometry.

your original question, alignment settings, is what you still need to know. have a look here. there's performance alignment specs listed in the article.
http://dazecars.com/dazed/bump.html
 

Last edited by R5CYA (6/04/2014 10:28 AM)

if you ever remove your coil springs, you'll have a great opportunity to run the suspension up and down and see what kind on bump you have. i'm gonna look into it hard after my new steering linkage is in, before i install the new spring perches. i'm dying to see how much i have then.

Do you sell them?