Well, Jack Roush put a 514cid big block based on the 460 in a Mustang II all the way back in the early 80s.
Problem is, the 5.4L V8 is as wide as a 460, and nearly as heavy.
Not saying you CAN'T do it, a sawzall and the ability to weld, along with time and money for materials makes virtually anything possible... just questioning whether it's such a good decision or not.
There's a salvage yard near me with three Lincolns with the 4.6L DOHC engine in them, I could have any one of those engines with all the trimmings for less than $1000. I absolutely LOVE the way the 4.6L DOHC engines run; I've driven the Lincolns, the Mustang Cobra, and Mach 1s all with them, simply the most wicked chunk of aluminum and iron Ford's put out in a long time; only thing stopping me from yanking one and running that instead of the 302 I'm building is the fact that I'm not sure I could make it fit cleanly enough for my tastes, or that I could afford to pay someone else to do it.
__________________ 1976 Ford Mustang II Ghia: 302 with a 600cfm Edelbrock carb, Edelbrock Performer 289 intake, Dynomax Blackjack headers, 2.5" exhaust with Flowmaster Super 44s. RJS 11-gallon fuel cell, C4 tranny, chrome 16" pony wheels, fuzzy dice, brown vinyl half-top, and painted in the tackiest color ever (harvest gold, that's why I call it "The Goldenrod").
Also have a 2003 Dodge Ram (lightly modded daily driver/tow rig/office/dining room/home away from home/workshop... I call it "The Big Blue Dawg".) | 
5.4 into a 77 Mustang II Cobra 
Anything will work given money and ingenuity. That being said....I want to see this thing if you pull it off. It's not a project I would even remotely want to tackle. Your dealing with a Pinto sized engine bay. Muscle Mustangs had a project Fox body with a 5.4 and they had to cut a chunk out of the hood to fit the factory intake. How does the II's bay compare with a fox? Best of luck.
