Hello fellow mustangers, I am fairly new to this as well and my 2002 mustang gt has a blown engine. I was told by a local mechanic that a 1997 NPI mustang gt engine would work but after reading a couple forums I'm not sure. I have already purchased the whole parts car and was planning on swapping out the motor and transmission. Can you please tell me if this will work and the downside to doing this? This is about my only option at this point so I am willing to do just about anything to make it work.
To give you a simple answer: Yes, it will work.
If you can, I definitely suggest you take the cylinder heads, cams, intake, and exhaust manifolds from your 2002 GT and mount them onto the '97 engine. This is often referred to as a "PI Swap". PI stands for Performance Improved, and NPI for Non-Performance Improved. The 1997 NPI engines are rated at 225hp, while the 2002 engines are rated at 260hp. Because the pistons are slightly different in the NPI engines, your compression ratio will also be slightly higher when you put PI heads with PI cams on it. This will result in about 265-270hp at the crank, from what I have read.
I also suggest you keep the transmission from your 2002 if it is in good working condition. 96-98 Mustangs came with gear-driven speedometer, while 99-04 came with a digital speedometer sensor (OSS). It is definitely possible to use the transmission from the 1997, but I am not sure what is required to make it work with the 99-04 computer in your car.
If your current engine is badly damaged and you can not reuse the heads, cams, intake, and exhaust manifold, I suggest you get those parts from another 99-04 Mustang GT at the junk yard. The PI swap can also be done at a later time if you do not want to do it now, but you will probably be disappointed in the power from the NPI engine compared to your PI engine.
2003 Mustang GT
Intake & Exhaust: K&N FIPK CAI, Mac O/R H-Pipe, Custom Catback w/ Magnaflow Magnapack Mufflers.
Suspension: H&R Super Sport Springs, KONI STR.T Shocks & Struts, J&M Caster Camber Plates, Steeda Bumpsteer Kit, UPR Elite LCA's & UCA's.
Performance: BAMA 93R Custom Tune, FRPP 4.10 Gears w/ Terminator spec T-Lok.
Planned Mods: FLSFC, Eibach Sway Bars, Throttle Body, Plenum, Rims.