Rear axle decision finally finished and moving forward!
Going with a 1986 Mustang 5.0 8.8 rear housing that is 59.25" axle flange to flange (~59 5/8" outside of drum to drum) which is right on for the '67 at 59 3/4" - 60" drum to drum. The pinion offset for the factory 8" is < 1/4" and the 8.8 has an offset ~9/16" toward the passenger side which is less than 0.5 deg. over the u-joint-to-u-joint distance.
Swapping in 31 spline 3.73 POSI center section from a Ford Explorer with new bearings, clutches, seals, etc. and adding 31 spline axles from Summit.
Center section is rebuilt with carbon fiber clutches and 3.73 ring gear and pinion bearing replaced. Shims not perfect yet so more work required. This is challenging to get right but there is a very good video from LMR on this topic: Mustang Gear Install: Ford Racing 8.8 Ring & Pinion | 1986-2009 - YouTube
This will be hanging from a set of ESPO matched springs: big block competition versions with 1" drop. Removing the isolators and wedges and using Mustang shock plates. I listed the extra parts for sale in the Marketplace 67 Cougar Rear Suspension Parts
Will weld on extended length spring perches (Barnes B4W25028BP 7.75"x2.5"). Spec’ed for a Dana 44 but are for 2.5" springs and with very little modification they fit the '86 tubes very well.The longer length will limit some of the roll/wrap. They are also adjustable +/-1" if needed. Just going to tack in for now until I get enough weigh in the car to set the proper pinion angle. BTW: Barnes sells a Ford 8.8 perch but these fit larger diameter truck tubes.

