I have functional side exhaust on my '68 fastback. It is flowing out of a 351W with Hedmans into Magnaflows (I know, I know, I wanted Flowmaster Stage IIs) and it sounds pretty good I think. Clearance for the exhaust really isn't an issue because I have a high capacity Milodon oil pan anyway, so the exhaust setup does not sit any lower than that.
As far as HP gains go, I couldn't say, because this is the way I had the car setup initially, so I don't have anything to compare it to.
Good luck!
Kelton