GOTCHOPSTICKS,
Go for it! First of all no matter who is racing, there is always a winner and always a loser. Not standing up to the challange is even worse than losing. (In my opinion). Racing for me is fun no matter if I win or lose (winning is better, but there is ALWAYS somebody faster). Last fall I pulled up to a stoplight here in Chicago, and the next thing I know a Ferrari 360 Modena pulls up next to me. We look at each other and nod, rev, wait for green and BAM. I got a good jump on him, and pulled through first, as soon as I hit second he passed me and we both stayed in it until about 85mph. I lost, but it was fun as hell.
Second thing, I have a 97 GT and my best friend has a 98 Cobra. We race all the time. When we first started racing each other, I had a chip and a cold air intake. I would get him through first, and the beginning of second. Then, he put on a catback and cold air kit and I put in a plenum spacer. Still the same.
Your car should have about 50-70HP over mine, especially with your mods. It will probably be a close race, but no matter what the result just have fun. And if he does beat you, then you can start thinking about the next mod.....