I used a cut off wheel and a grinder to remove the old brackets, and smooth the tubes. Came off pretty quickly (IIRC about 30 minutes worth of work). I did not cut the the ears off of the center section. Didn't need to, and wanted to keep the strengthening rib. Just my personal preference.
The shock mounts are on the spring plates, so that is not an issue.
On the rear end housing I bought ('91 GT) the axle tube diameter was 2-7/8". Which meant sourcing U-bolts. The U-bolts need to fit snug over the axle tube. 3" were too big and 2-3/4" were too small. I found them at Napa.
The Cobra brake brackets came from North Racecars. Great people, I used their recommended brake cables and extended the "Z" bend rod to make up the difference in length, then used a '67 cable bracket and changed the cable housing mounting points. This allows the use of the 11.65" Cobra rear disc brake setup, and works great!
For about $250.00 you can get FRPP 5 lug conversion axles and drums for the stock fox rear end. That is a great way to go, if you're not sucked into the 4 wheel disc brake hype. At that point it's pretty much a cut/weld/bolt and go project.
You have a couple of choices on welding up the spring perches. Basically the perches need to be perpendicular to the centerline of the axle tube, they need to be equi-distant from the backing plate flanges, and the correct distance apart (based on the distance, center to center of the spring locating pin). Lastly the stock pinion angle is 3 degrees. More importantly, is matching the pinion angle to the transmission output shaft angle. So you might want to mount the 5.0 and T5 first, set the car on jack stands so that your rocker panels are perfectly level, then measure the angle of the engine/transmission, and weld your perches accordingly. This will eliminate the vibration issue I hear a lot of people complain about with the 5 and 6 speed transmission swaps.
You can weld the perches in the car (a real pain in the rump way), or build a wood jig, and do it over a couple of saw horses.
I think you will find the drive shaft for the '86 Mustang is going to be too long. That's a good thing, as shortening it is cheap. I just measured my driveshaft. it is 49.5" center to center on the U-joint cap. I am using the stock '91 pinion flange.
I have a 6 cylinder that pushes the T5z all the way back on it's mount. I am planning on pushing the v8 as far back as I can (for weight balance). That said, the most I'd have to go forward would be 1/2". So if your driveshaft is at least 50" long center to center on the U-joint caps you are good to go. Just shorten as needed.
In order to use the stock rubber brake line off the '86 you need to take the fitting off at the body, then use a die grinder to open up the bracket on your '66. These fittings are not made anymore, so don't let the '86 get away without getting this. I modified the stock '91GT rubber
brake hose bracket so that it allows full
suspension travel both ways without kinking or stretching the hose. This does not leave much room for dual exhaust, and when the V8 goes in I'll reroute the whole line and hose assembly over to near the frame rail. You'll need to look at this closely for your application.
I just put up a quick web page at Car Domain. You can see a few of the pictures there. I'll try to put up an entire step by step with pictures as time allows for others who want to do the same thing.
http://www.cardomain.com/ride/2400202
HTH,