The engine bay gets pretty hot. It'll keep heat off your hood. Excpect the paint on your hood to deteriorate quicker without it. If the engine bay was better ventilated, I wouldn't worry about it. But it appear air flows in, but has a hard time flowing out, thus the hood "float" problem.
When I bought my Impala, I asked the salesman specifically about the underhood pad on it. According to him, it is attached to the hood with plastic bolts/pins that are designed to melt at a specific temperature. If the engine catches fire, the bolts/pins melt, allowing the pad (or "blanket" as he called it) to drop down on the engine, smothering the fire. It was put in there primarily to do that.
Now, that is on my Impala. I would have to assume that the Mustang's is similar is design and purpose.
BigWorm, your salesman is correct. Your comments reminded me of a conversation with a good friend of mine who used to be the shop foreman at the dealer I bought my Stang from. Those were his words on the subject as well. Thanks!