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If you haven't figured out your engine by Spring, let me know because I will be getting rid of my '94 Police Interceptor and I would deliver it for the cost of fuel and a return bus ticket. As for the price of the car, cheap.
As everyone has already stated, it's your truck and you will have to make the final engine choice. Remember also that it doesn't have to be the last motor you ever put in it either. When I found out we were getting the panel the first thing I wanted to do was go built 351w and a possible turbo but I also wanted to be driving it within the next two years(that's what I keep saying anyway). So with a limiting budget and time we decided to pick up a 302 in the mean time and I will look for the 351w in passing and build it little by little. We picked up an '85 Lincoln town car with a 3 speed overdrive for the donor. Have fun with your build and don't get discouraged, you will buy the wrong parts and change your mind often but it's just part of the process.
Welcome to the forum! It is always cool to see a truck with some kind of family history.
I also went the 351W route. I built my 351W in an almost stock configuration. It was originally out of an 89 F150, but I set it up really close to what might have been in a 69 Mustang....carburetion and cam (plus cam timing) are basically stock for something of that year range, so somewhere around 290 hp. I find that to be plenty of power. Above 65 mph or so and you can really feel that flat slab of a windshield. These trucks weren't all that fast when new. If on the other hand, you want to win burnout contests, then go for more power!!
The other factor will be your skill set. If you are good at fabrication & want to pair up an engine and transmission, then go for a swap. If you want to try your hand at restoration, then keep the flathead. I can say that a smallblock Ford will fit right in. There are plenty of examples in a number of threads on this forum!
300 cubic inch inline six uses the same crossmember as a big block... Don't mind me I'm just sitting over here dreaming about a nasty cammed six cylinder... I've got one in my '53 and it fit with room to spare. I also know of other with similar setups as your truck with this six in them.
Btw the six has the same bell housing bolt pattern as a small block ford so you can run the same transmissions as any v8 guy could.
As said before, the 427 will have to be followed with lots of other mods. It could get really expensive, but could also by fun to drive if you like to accelerate and don't mind the mileage. They also take a lot of room under the hood and the steering will be a challenge as well as the exhaust.
I am one of the "evil" dark siders on here with a GM350 in mine. It was in it when I got it, but I did rebuild it. I have a 700r4 (overdrive) to help with highway mileage and the motor is almost stock with only an RV cam and flat top pistons.
I also have a 54 Panel with a 289 that I am in the process of rebuilding. I like both motors and personally don't have a problem with either one in my trucks.
The bottom line, of course, is you make the choice that suits you.
I dropped in a Ford Racing 306 in mine with a AOD. 340HP, runs good and has a warranty. Needed a new drive shaft but I used the original Dana 44 with the 3.92 gear, run's 80 at 2300 rpm with 15x60x275 rear tires, runs 70 at about 2000 RPM, plenty of power not a brusier but a nice cruiser and I get 20 MPG. No frame modifications, just welding of mounts. Happy with my power choice.
I also did losts of other upgrades, added A/C, front disc brakes and converted the original rear to a posi, new posies springs all the way around etc. I have put 11K on the truck the past 1.5 years, including drives of over 4 hours.
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