Welcome to the site!
I have a couple of mustang iis as well. I think the only engine you'll fit in there without EXTENSIVE mods would be a 351W since it is the same basic block as the 302. It would bolt right in with almost no mods to the car and give you gobs more hp. It could be bought as a crate motor from Ford Racing, Summit Racing, etc. or a used high output engine from an 80's Ford car or truck. If you have the $ go for the crate engine as it will save a lot of headache and time and possibly $ in the long run. Any other engine like a 351C or 351/400M, 460, 390, etc would be a bigger engine and necessitate cutting, welding and fabricating your wheelwells, engine mounts,
trans mount, driveshaft, firewall, radiator support, and a few other things as well. The Ford small block was shoehorned in the engine compartment in the iis from the factory as it was and is really all you can fit in there now so I'd go with the 351W or maybe a 5.0L HO(also a 302) from an 85-93 mustang.
1977 Mustang II Engine swap 
