Put in a 5.0! Seriously, right of the bat, you're down on displacement, not a drastic amount, but when you don't have a lot to begin with, everything makes a difference. Next is what makes the 5.0 such an animal, the roller cam. By the time you spend all the money to put a roller cam retro kit...you could have picked up a good used 5.0 motor.
Anouther problem with the 289, the heads have small chambers. Most of the aftermarket heads along with Ford heads is that the combustion chamber is about a good 10 CC or better, resulting in about a full point loss in compression.
Look to Explorers for a 5.0. These had much better cylinder heads then the 5.0 Mustangs. The first Explorer heads were GT40's. Then they went to G40P heads which are a better head yet but you'll need specific headers to work, such as MAC's.
You should be able to find a good used low milage Explorer motors in the wrecking yards, God enough of them rolled over! Just swap out the stock roller cam for a good one and re-use your intake, you'll have a screamer for not a lot of money!