Manny...I'm thinking along the same lines. Yes its a bit of overkill, but I'd like to see someone do it, maybe even me.
I think that you need more than 2 inches though, more likely 4. The big problem is what to do with the oilpan sump.
-If you have a 302, then I think you need to move enough to use the Fox dual sump oilpan, or far enough to get behind the suspension crossmember...maybe you could cut a chunk out of the back of the crossmember, as long as you re-inforce what's left and maybe add diagonals to the framerails.
-If you have a 2.8L V6, then you need to move enough to get the sump completely behind the front suspension crossmember.
-If you have a 2.3L, I believe that the Fox models use a rear sump.
Another possibility would be to use the 3.8L V6 and T-5 and EFI from a '99+ SN-95 Mustang...you get 190HP stock with room for mods which would be fun in a 3000 lb car. And it should fit behind the crossmember with some work. I believe that the '80's 3.8's used rear sump oilpans.
I'm keeping my eyes open for a set of the aftermarket fiberglass fenders as they would be easiest to move the wheel openings forward.
For the front suspension, I'd use tubular upper A-arms and tubular lower arms that eliminated the strut rod.
I'd love to use an aftermarket crossmember, but won't have the cash. I'm going to have to figure out a solution that slides the stock crossmember (and spring hats) forward. I've seen pics of a crossmember cut out of MII framerails and it was a mess...lots of folded metal panels join together in that area. I suspect that it will be a bunch of fab work for either the stock crossmember or an aftermarket one.
78CobraII