You dont HAVE to change the rear axle or front suspension but it is a good idea too. The crappy 7.5 will hold up if you are not prone to burn outs. The front suspension will be ok if it isn't already wooped out, but it prob is due to age. You can get some cheap struts from O'Riley's and press on if you are on a budget. Front disc brakes from a donor 87-93 are nice but not needed. Bear in mind the 79-86 mustangs all used the same brakes for all those years and they worked fine for a 5.0. Everyone will tell you need this and that, but if you are just putting a 5.0 in and not making a race car the old stuff can survive this. The 5 speeds are diff for 4 cyl and 5.0. If you are using a carb the painless wiring harness for the duraspark ignition is awsome and cheap, about 100 bux. Since it is a 4 cyl it's wiring wont jive with what you are doing. If you are using a roller cam engine, you will need a non EFI distributer, and it will need a billet steel gear on it for the roller cam. If you are just using a non roller 5.0, just use any dist that is non efi. The painless harness just needs a power source and a duraspark box from a donor car or ebay. You don't have to change the K member if you do decide to upgrade your front suspension, they are all the same, save for the convertable. Your 4 cyl K member will work just fine if you want to upgrade your struts, springs and brakes. If you do upgrade your brakes to the 87-93, you will need a donor spindle from an 87-93.
Myles