If the motor runs, drive it and have fun. If you aren't beating on it and the motor has been maintained properly you should be able see the short side of 200,000. If it were me I would plan on a rebuild in the not to distant future. A new tight motor is a beautiful thing, especially when it is purring in the engine compartment of your classic Mustang.
If you do the rebuild yourself, the parts and machining for a stock rebuild shouldn't be more than $1,000 to $1,200, if you are paying a shop to do the R&R your stated price is right in the ballpark.
For a quick visual on engine condition do the following:
-pull the breather off the rocker cover. If you see a grayish smoke coming out the piston rings are getting tired. The more and forceful the smoke, the farther along the wear is.
-Have a friend follow you on your test drive.
a. During acceleration, white smoke from the tailpipe is the rings again.
b. Lifting off the throttle will create a vaccum, if the valve guides or seals are worn oil will get sucked down into the cylinder and burn causing more white smoke from the tailpipe.
If you want, a compression and leak down test is a good idea but this involves removing the spark plugs.
Listen for abnormal noises. Just remeber, worn bearings can be quieted down with motor honey or real thick motor oil. Valve train noises can be dampened with rags stuffed under the rocker covers.
Hope all this helps.
