Front Disc Brakes
There are a number of web pages with lots of details on converting the front drum to discs. Here I will explain the changes I made to my Mustang along with a bit of interchange information.

I used the front spindles, hubs and rotors from a 1977 Granada. Some Granadas have 10" rotors, the one I found, with a 302ci. V8, had 11" rotors. There are (at least) 2 ways to remove the ball joints from the top and bottom of the spindle arms. One way is a "puller" that pushes the ball joint "bolt" out of the tapered hole in the spindle arm. I couldn't afford the special tool, so I got the "tuning fork", slid it between the ball and the arm, and bashed the hell out of it with a 2 lb. ball-peen hammer. When finished, the ball joints are beat to #%$^#, so you have to get new ones. My front suspension was so bad, I figured I need new ones anyway.

The Granada parts go in easily. There are only 2 small "gotchas". Firstly, buy new outer tie-rod ends to fit a Granada. The original Mustang ones are the wrong diameter (the threaded taper). Both the Mustang and the Granada have the same diameter tie-rods, so that end is not a problem. The bolt pattern is the same as one of Ford's more common usage. So the differential from the Mustang/Cougar/Montego has the same spacing as the front discs from the Granada.

The second item is the brake line needs to be replaced. This really isn't a big deal, however. There is a union in the brake lines near the wheel well on the passenger side, so you need not remove the whole line (like I did before I found the union). The original drum brakes have the flexible brake lines coming off towards the rear of the car. The Granada discs make the line come towards the front. There simply isn't enough length in the flexible hose to allow the wheel to turn without pulling on the line, probably damaging it after a few turns. I got the front disc brake lines from a 1970 Mustang and used them. They connected perfectly. Tthe '70 disc setup has a union in the same place as the '67 drum setup, so the lengths are fine. An alternative approach is described on the Mustangs Plus website.

By going to a "pick-n-pull" junk yard, you can do your own mix-n-matching before you pay for the parts. So, I found two sets of calipers with bearings in good condition, tossed their rotors and found a couple of good rotors on a different Granada. I put them all back together and got two very good rotors spindles (bearings), hubs, and rotors. 

A third "gotcha", that didn't get me, is that the snout of the hub is larger in diameter than the hole in the stock style wheels. Since I had to get new 5-bolt wheels, I just made sure they would fit.

The two pictures below show the positions of the brake lines in the drum type brake and the disc type brake. There are some additional pictures in the suspension section.

Drum Brake Line Routing on a 1967/68 Mustang           Disc Brake Line Routing on a 1970 Mustang

These two pictures were taken at Pick-n-pull. In both cases the flex/hard line fitting is mounted to the frame. The left shows the position of the brake line for drum type brakes. The flexible line to hard line transition is mounted right behind the spindle assembly. The flex line aims towards the rear of the car, goes behind the spindle assemble and attaches from the rear into the wheel cylinder. The disc line (on the right) shows the flex line to hard line transition mounted foreward of the spindle about 12" (left side of the picture) The flexible line (cut off) aims back towards the front side of the spindle assembly. On the drivers side, the hard line has no union. It just goes up to the proportioning valve next to the master cylinder. It is easy to remove the drum hard lines and replace them with the disc hard lines. 

11" Rear Drums
My drum brakes came with the 9" rear end out of the same 1971 Mercury Montego as did the engine. The Montego differential is not optimal because the spring perches are in the wrong place, but everything else, including the complete brake setup, is fine. The only "gotcha" is that the Montego flex hose mounting bracket. The flex hose connects the hardline fixed to the differential to the hard line that runs to the master cylinder, and is bolted to the differential housing on the driver's side. The Cougar housing uses the same mounting method as the Mustang, which is quite different from the Montego. So, I had to buy a new hose for $39.00!

Again, being able to mix-n-match parts at Pick-n-Pull meant I could select drums in good shape. I rebuilt the rear wheel cylinders, though, just to be safe

While I was getting the brake lines from the 1970 Mustang, I also picked up a dual master cylinder for disk brakes. The disk brake m/s has bigger reservoirs. These are needed by the disc brake pistons. I also picked up the proportioning valve for a disc/drum brake setup from the 1970 Mustang.