You are well on your way to getting deep into the project, asking questions and the research time is very valuable. Keep working on the budget as you figure out what certain things cost, and expect it to take longer than the first estimate.
I suggest if you can spend the time, to join the
http://sbftech.com/ forum and read a lot about the best Ford parts these days. There is a myths section there and others which open up after ten posts to members. The bottom line is that you can learn of the best parts to use, and/or sizes etc, and end up spending no more, or less than if you rush in and then change things again later.
I learned from SBFtech just after ordering my engine and cam/heads about certain engine building facts I didn't know before. So I ended up with a little extra cost in my engine and planned it with the stock intake(mistake). It'll only cost me 30HP or so but this 347 will eventually go into my Mark VII, which doesn't need as much power.
I think you will do fine with the AWD if you don't use any boost or nitrous. If you search enough on the SBFtech forum, you will find a few examples of 400RWHP 347's or 332's. With the right heads/cam and compression, that is not hard to do. Keep your rpm's to a reasonable level like 6000rpm(which will bring the max power down a little). You can get the engine tuned with the stock PCM and have it be completely docile in normal driving. The trick is the right custom cam matched to the best heads and intake.
You will need a well built trans, start with a 98 or newer model, and for that higher power don't use a TransGo shift kit. Those are for closer to stock power levels. Contact Alan of Dirty Dog transmissions for a torque converter, and trans advice. He will suggest a car valve body and to do the Jerry's Mod" to it. That's what I'm doing with mine at the moment.
You will be frustrated by advice about exhaust. The stock system sucks, and 99% of what you hear will be wrong. A strong 347 needs a lot of exhaust, any fast Mustang will have dual pipes of at least 3" all the way back. The goal should be the same, make it as big as possible, given the restrictions around the engine and trans. I'm going to move my fuel and brake lines into the frame to give me room for 3" pipes. I don't suggest you do that but find a good local expert to look at your truck around the front pinion to let them explain how tight it is in there.
A healthy 347 would need headers of about 1.75" in size, so when you read of how great 1.5" TM headers are, understand I think they suck and I'm nice to not say it often. Your only choice for headers is going to be those little 1.5" headers, or to have a set custom made, and that is extremely expensive, so nobody does it. Regards,
