Expect to spend 2 or 3 times what you originally estimated.
Expect it to take 2 or 3 times the amount of time you thought it would.
Expect to have a ton of little issues and problems along the way that you never even thought of.
You better own a welder, several cutting tools, and a large selection of hand tools, jacks, jackstands, oil catch pans, chopsaw, etc..
Yes the 302 or even the 351 can be made to fit. Header selection is important.
Expect to have clearance issues all over the place. Steering shaft, headers to frame, crossmember to oil pan clearances, exhaust routing clearances, fabbing or modifying your transmission crossmember to fit the new trans mount in a new location, radiator to fan clearance issues, fabbing up radiator hoses because nothing factory fits quite right, heater plenum to valve cover clearance, etc..
I'd switch to an 8.8" axle myself.. Explorer axles work well for this, have disc brakes, are limited slip normally with 3.73 gearing, and they're cheap and plentiful, but you'll have to cut off the spring perches and weld them back on to the axle tubes on the top side in most cases. Unless you're going for a seriously low stance..
People have ran the original 7.5 rear axle with V8 swaps, but in my mind, it's a ticking time bomb.
In most cases you'll need a new driveshaft, depending on where your engine is located front to back..
The T5 transmission works well, but any T5 from a Mustang will put the shifter too far back to be usable with most factory seats, and it will require cutting a new hole in the floor. Bucket seats can be used to help with this but the shifter will still be pretty far back.
My advice to you is to keep researching this for a loooong time before making the commitment. I researched for years before doing it, just so I had an excellent understanding of the issues I'd come across and I could come up with a quick resolution. Every bit of good info you find on the swap, save a link to that webpage in a new folder, or copy/print screen so the link doesn't disappear on you. By doing this, I was able to complete my swap in one winter and drive the truck out in the spring, but there are often lots of little issues remaining that may plague you for some time, so be prepared for it..
GB