It is still a fox chassis. If you have time under a fox body, it is the same chassis. The drive train is what is different.
I would get a plan for what I wanted out of the car.
Sounds like it doesn't look that good and has had a hard life?
If so I would use it as a race car.
The amount of labor to pull heads,manifolds and all pumps etc.. Is not worth Not rebuilding the engine.(or at least a good used one) There is most likely damage in the cylinder that is why the compression is so low. I would do a leak down test , pull a valve cover or better yet get your hands on a bore"o" scope. (this thing is the sh!t, its a little video camera with a goose neck lens. you put it in the spark plug hole to see damage)
It would save you the labor of pulling the engine apart. You could pull the motor and just put your new one in.
A new engine from ford with a 3 year warranty is around $4500
A motor built by a good builder better rods and bearings and pistons $5500 and up
There are a bunch of really good builders. dss racing is big ford.
If you have never driven a fresh 1997 32 valve early cobra. They are a blast to drive and handle well. You get 1000 rpm more rev than a 5.0L and is over 300 hp stock, put gears in the rear end and good exhaust. And you have a pretty fast street car
__________________ 1988 coupe race car 2700lbs 366rwhp
1965 2+2 fast back 4 speed tri power
1968 gt/cs 347 5 speed
1970 mach 1 428scj 4 speed v code 410 rwhp stock
1990 gt drag car 780hp on motor
1994 gt, 1998 svt cobra
2003 svt cobra 456rwhp | 
Going from a 289 motor to a 4 valve 4 cam high-tech motor 
has been a learning Experience. Good luck on getting it fixed
