Retro Magnum500 wheels on a 67/68?

Yes you can get the rims to fit. This company makes a nice kit.

http://www.vintagevenom.com/mustang-full-disc-brake-conversion-kit.htm

The Cobra engine can fit but takes alot of work, most use a Mustang II style front end setup to get it to fit. This requires removing the existing shock towers.
Good luck on whichever way you decide to go with it.

not a big deal, really.... you are going to need spacers, as the late model cars take a different backspacing.

This thread shows them on a 65/66 body.

http://forums.stangnet.com/showthread.php?t=713656&page=5

if you are careful with your spacer selection, 245's should fit...

I had them on my '68. At the time I LOVED the look, but as time has passed, I'm not as hot on them anymore. I don't think they have enough of a "deep dish" look to them for a classic car...look at some pics in my rather rudimentary garage gallery I've set up tonight.

Anyway, here's the setup I had:
620 front coils
Mustangs Plus 4.5 leaft mid-eye rear leafs
KYB Gas-A-Just shocks up front, cheapo adjustible air shocks out back (not a huge fan of air shocks, but they came with the car and worked, so they stayed)
(if I recall correctly) 1.25" spacers
Contenental ContiExtreme Contact 245/45ZR17 meats

Never had any rubbing nor did the wide tires take a toll on my steering system. The added traction from the bigger tires more than made up for the added unsprung weight as far as braking goes.