http://www.flatfire.com./

This link might get you going, but I think they spent more than $2500 on the project.

Flatheads are like any other engine. Your 49 should have the late series flathead, so your distributor should be on a stem like more modern engines. Easiest performance upgrades - headers, 4 bbl carb on an aftermarket intake (don't go above 390 cfm), higher compression heads, cam, etc.

Spend time reading as much as you can - links to flathead sites for msn groups 32-53 flatheads is a great one with tons of extra links. fordbarn.com is super. yahoo groups has a great flathead site as well.

Back to your original question - that flathead started with 100 horses at the flywheel. So you are correct - almost anything else will beat it in stock form. For $2500 you can probably get upwards of 175 HP, but not much more. Your 49 sedan is a pretty heavy platform to start with for racing - that's why the original hotrodders were using lightweight model A's and 32-34's. 3.92 gears should be good for what you're doing. Keep your races short where the flathead torque can work to it's best advantage. 4.27's would be even better. Consider using a C4 conversion - those stock trannies have to be shifted slowly or you'll rip the gears out of them in your first match. They're synchro'd but barely by modern standards.