If the bottom end is in decent shape, then $250 sounds fair. I would just get some E7's to be honest. They are hardly the highest flowing heads out there, but they are cheap, easy to find, and are fun on a stock motor. No use putting aluminum heads if you don't have a big cam and increased compression anyways. You will be amazed at how fast a first gen mustang can be with a essentially stock small block.
Not true. Mild cams and low compression can be a good thing, later on for turbos and low compression with a mild RV cam can give you monster low end torque.
Just be sure you have a good rear axle (3.73 is a good choice) and a manual transmission. Autos suck the life out of an engine, IMO. My brother has a '67 coupe with a stock-block '91 5.0 engine, bored over to a 306. It has a holley 600, longtube headers, and that's it. 3.73 gears paired with a T3550 5 speed manual trans, and it will roast the tires (275 section no less!) through all of first and second gear. It genuinely shocked me how quick it was, considering how pathetically slow it was when the same engine was mated to a C4 auto and 2.72 gears.
3.73, 3.56 and 4.10/11 gears are probably the best set of gears you can get. I'm willing to bet since it had an automatic it was probably either a Cruise-O-Matic or a C4, the latter being the better of the 2.
Let me put it to you this way, producing torque at the rear wheels is what accelerates the car. Let's assume you have a 1:1 gear and a 2.72:1 axle.
Torque wins races. I doubt he'll be racing this anyway.
If you increase torque at the motor from 280 to 320 (somewhat realistic, although it's more likely just to shift the torque peak higher in the rev range) you will be producing 870lbs*fts of torque at the wheels, in the 1:1 gear, which is about 110lbs*ft more than you would if you left the engine alone.
Generally. Other factors come into play though sometimes with certain combinations or setups.
Now if instead of modifying the engine, you change the rear axle ratio to 3.73:1 and leave the engine torque at 280, you will be producing 1044lbs*ft of torque at the rear wheels in that same imaginary gear! That's a stonking 285lbs*ft more! More than double the gains you would get from doing expensive engine modifications.
Doing both will be one scary car. That's why when you tell someone you have a low horsepower can that launches like a bat out of hell makes them think howdafukkdidudodat?
Of course with higher gear ratios means that you aren't able to go as fast in each gear, but later on, you merely have to upgrade the engine, allowing it to rev higher (heads, higher-lift cam, etc) and it will make up for it.
Remember, torque at the engine is largely irrelevant. It's the torque that gets put to the pavement that counts. That is why low torque, high power, high rpm cars are just as fast as high torque, low rpm cars. Gearing + RPM!
Rotary ftw?!
I may have gone on a tangent..apologies.
Like I said before, low compression with a mild RV cam will make gobs of low end torque, either in or below 3500 rpm, while leaving the option to turbo. Ghnsu, if you plan to turbo it later on for whatever reason, make sure compression stays 8.5:1 or below.