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No you should be getting better mileage than that I would think. I've got a 5.8 V8 in my 91 F150 I get about 14-15 mpg.
The transmission isn't the only thing you should be focusing on. Were the emissions components removed? A lot of times people don't realize the drop they'll see in mpg when they remove the emissions controls.
Otherwise do you know if the engine may be in need of a tune up?
You can also try pulling diagnostic codes. In case you're not aware you do not have to have a check engine light in order for codes to be stored. Use this link to show you how to do it if you don't have a scanner. Ford Fuel Injection » How To Run a Self-Test
I own a Snap On MT2500 scanner and have done some diagnostics on the truck. There are no trouble codes. The only thing I can see is the engine temp runs about 188 even running down the road.
As far as tune up, I will do that.
I also have a 1990 3/4 F250 cargo van with 302 and AOD and it will average 15 on the highway. It's like driving a billboard down the road. Even loaded pulling a trailer it will get 13 if I drive it right.
That lift/body lift and big tires are huge contributors to your poor mileage problem. It is amazing how much rolling resistance those tires add as well as aero drag with the lift.
I will ask this as well, did you recalibrate the PSOM to compensate for those tall tires?
A tuneup is in order to eliminate bad plugs/wires/ect. I wonder if the cooler running temperature is keeping the PCM in open loop as well? 188 degrees should be high enough, but I would like a little warmer temperature myself.
I'm not sure who is responding to whom in the thread I started. But this truck does not have any lift kit, nor anything more than stock type tires. Not oversized or big tires.
I did bump the timing up a little and it does run better, and will install a new thermostat to get the temp up where it should be.