Yup, as you said, a Pyrometer is for measuring exhaust gas temperature (EGT). This gauge will help ensure your tune is safe.
On an NA mustang in good tune, I doubt you'll never have a problem with excessivly high EGTs. At full throttle, you'll probably see around 1200F, and at idle, maybe 800F or even lower. The exact number will vary for every engine, and the temperature where you make peak power will vary for every engine. I personally don't think it is very useful on an NA V8.
Excessively retarded cam or ignition timing can cause high EGTs, and of course lean mixtures will show hotter too.
There is no hard and fast rule that says at what point your EGTs are excessive. Some say above 1400F is too hot and others say up to 1800 is ok in short bursts. It really just depends on your engine, your tune and such. I play with 2.3 turbos and there are plenty of people that see 1700-1800F at full boost (25+psi). Again, I doubt your V8 will ever show more than 1400 under full load.
Don't be surprised if you see high temperatures at cruise or light acceleration either. Under these condition, the engine is stoich (14.7:1) and that's where the flame and thus exhaust gasses will be the hottest.