175RWHP and 246LBFT

It's alright. The 120K on your car is probably killing performance. IF you plan on doing that much power I recomend a rebuilt shorblock. NOT for strength but let's face it after that many miles engine performance will suffer. That's one thing people overlook when modding. You can get a stock rebuilt shortblock for cheap.

Don't be afraid of mileage. Get an Explorer Intake along with a 70 mm Throttle body and some underdrive pulleys. I had 233,000 when I last went to the Dyno and with the Explorer Intake, underdrive pulleys, 70mm Throttle body, MAC coldair kit, stock MAF meter, MAC shortys and o/r X-pipe with stock AOD I put out 221 RWHP. More could be gained from a good rebuild, but with stock heads and cam decent numbers can be achieved.

Jeff
www.ThunderValleyMustangs.com

I wouldn't be afraid of 120,000 mile either, a properly maintained 5.0 can run quite a bit longer.

Having a flywheel hp goal is really not the way to go. Since with the motor in you'll never know how much you actually have. Pick a rear wheel number.

With Heads, Cam, intake and all the fuel necessites you can probably make around 300 rwhp with you 120k motor.
Enjoy it while you can, meanwhile have a block done up to replace yours when it goes.

I know people with 250k+ on their engines that don't burn a thing.

I know an AOD wastes a bit more hp, but 175 seems kinda low especially since it has full exhaust. If i remember correctly a bone stock 5-speed makes about 190hp.
You may be in need of a fresh tune up.

On what dyno though? Dynojet or Mustang? If it was done on a mustang dyno then the numbers are pretty good for being an auto with few mods.