MS can give you all the 'heartaches and joys' of a 351 in a 66 Mustang. I do know they are pretty tight between those shock towers. They make headers(long or shorties) to fit. I have heard one issue is its sooo tight heat has a problem getting OUT from under hood!
If UR handy eliminating the shock towers is the ultimate answer.......then everything drops right in! Prolly slide entire engine WITH headers attached right in. Especially if you make the radiator support top rail removable like DC!

I vote YES.  You can get some money back by selling your old 289.
6sally6

If you buy it, get all of the front bracketry.  Much of 289 brackets do not fit and 351w brackets are more difficult to find unless you spend all that money for aftermarket brackets.  Get the engine mounts too.  There are more than one kind.

Shorty headers are better too.  They give more space under the hood and create much less heat.  Long tubes give a wow factor, but not a great deal of added power.  And, clearance under the car can suffer.

But don't be afraid of trying.  I did it in my driveway with my then 15 year old som.

I also may want to add aftermarket power steering for a quicker AutoX ratio..

It could be a nice "high-winding" toy butt..........not so much for street duty where TORQUE is king. You have good gears and a T-5 so a SBF with a hefty camshaft would work OK on the street. Maybe some AFR heads and good ignition you could see 375+ HP!  Anything much over that needs a longer stroke/bore. (think 331-347)
6sally6