cjperry81 - Don't take this the wrong way, but if you haven't had a problem with understeer, you haven't pushed your car in a meanful way; if you autocrossed it today, you would experience understeer.
Take your car out in a big parking lot and start to turn in a circle - big or little, it doesn't matter. Gradually increase your speed as you maintain the diameter of your turn...you will feel the car cornering harder and harder until your front tires break away and the car feels like it is "pushing" through the turn. Welcome to understeer.
All of our classic Mustangs (and most vehicles in general) will understeer in stock form. For our 64-66 cars this is primarly due to 1) horrible camber curve as the suspension compresses, 2) more roll stiffness at the front versus the rear, and 3) horrible front to rear weight distribution that puts most of the weight on the front tires. We can fix #1 with the Shelby drop recommended above, #2) with a rear bar, and #3) cannot be fixed easily, but it can be overcome.
A car that is neutrally balanced will corner harder (i.e. pull more lateral g's) than a car that either understeers or oversteers. Period.
Before I go into the why, if you really want your car to handle, you need to go get a copy of "Chassis Engineering" by Herb Adams and read it as many times as it takes until you understand all of it. Forget all the internet "knowledge" - learn from a master and you will be able to build a great handling car for much, much less than if you think.
Why a rear bar reduces understeer...
First, you need to contemplate the forces acting on your tires as you corner. Going in a straight line at constant speed, you have the weight of the car pressing your tires into the ground, and as we have discussed above, in our Mustangs, much more of the weight is concentrated on the front tires. As you turn at constant speed, weight is shifted from the inside tires to the outside tires. The amount of weight that is shifted is based on the weight of your car, the distance between the center of gravity of your car and your car's roll center, and the speed at which you are cornering. If you add a sway bar to control the roll of the body of the car, the bar will add additional load to the outside tire and will reduce the load of the inside tire as it works to flatten the body of the car.
So if we are riding in our stock classic mustang and we turn hard, the majority of the total forces will be acting upon the outside front tire.
Second, you need to understand how your tires handle these forces. In general, the more normal force (ie the force pressing down on the tire) applied the more lateral friction you will get. This is a simple concept, if you are sanding something and you push down harder, you will generate more friction. But it is not a linear relationship with tires, meaning that as you push the tire harder and harder into the ground as you corner, you generate more lateral friction, but the fricition does not increase at the same rate as the load applied. This means that the tire becomes less and less effecient a generating additional lateral friction with every additional pound of load placed on it.
Why is this important? Because as you seek to corner harder you ask to your tires to provide more and more lateral friction as they are becoming less and less efficient at doing so. The tire that is least efficient - meaning that it is converting the least amount of load into lateral friction will be the first to break away... the first to lose grip. If you could somehow balance the normal loads between the two outside tires, you would generate the maximum lateral friction and corner the hardest.
But back to our example with our Mustangs. The outside front tire is going to be the most heavily loaded in a turn due to weight distribution and a "front only" sway bar, and is also going to be the most inefficient - and it is going to be the tire that breaks away. And you will experience understeer.
So, to fix this, and to make the car corner as hard as possible, we need to seek to balance the loads applied to the front and rear outside tires. This is most easily accompolished with a rear sway bar. As mentioned previously, as the sway bar acts to fight body roll, it adds load to the outside tire and reduces load on the inside tire. In a stock classic mustang with only a front sway bar, the majority of the roll stiffness for the entire car is provided by this front bar - and thus, the load generated as the bar fights the body's roll is fed into the front outside tire. If you add a rear bar, it will now contribute some portion of the roll stiffness of the car and will feed that force into the outside rear tire. Since the rear tire is now taking some part of the load that the front tire was taking, the amount of load fed into the outside front tire is less and the outside front tire becomes more efficient.
If you have the ability to adjust the stiffness of the front and rear bars, you can dial them in such that you can balance the forces acting on the front and rear outside tires and thereby generate maximum cornering force.
That is why a rear bar reduces understeer.
Clear as mud?
BTW...before anyone flames me, I have intentionally left out a lot of the finer points of suspension design and handling dynamics for the sake of a relatively simplistic explanation.
Good luck...
