Does anyone know if it is possible to convert a 5.0V8 AWD Mountaineer with the automatic to a manual transmission, maybe one out of a truck? What is involved in doing this?

Funny you should ask, I'm looking for info somewhat along those lines. I suspect the biggest hurdle would lie in getting the t-case to mate to a T5. Of course you would need a tranny with a 4x tailshaft. I have not yet found any info on how similar the 4404 t-case is to the 1354 (and related models), but the pics I've seen make them look very similar, externally. If they ARE the same, then an adapter from Advance Adapters would probably connect the two together.

Other than that, there's the usual hole in the floor, possible driveshaft mods and crossmember relocation, and the all-important, "What are you gonna do with the column shifter?"

I'd be very interested in any info you come across. :)

If you Used the t-5 tranny you could get the 1354 t-case adaptor from advanced adaptors and use a atlas II t-case designed to replace the 1354 t-case. This would mean replacing the tranny and T-case and maybe the drive shaft...

It sounds like it would work...

The only problem with that scenario is that the AtlasII is not an AWD t-case. Now, if he's not concerned about keeping true AWD capability (like I am), then this won't be an issue.

If you lost the true AWD capability would you (or could you) have 4x4 instead?

Yes, if you have awd now, and convert to a manual or automatic transfer case, then you will have a 4x4 instead of all wheel drive.
Pete