So, what kind of Engine should you put in a 1967 Mustang, anyway? When selecting an engine consider the following:

Availability
Weight and Width
Performance
Bell Housings

I think you'll see why the small block engines are far better than the big block for a retro-fit. Go to the Specs page for help finding and identifying  a 351 Cleveland.

Availability
Mustangs have been equipped with 289, 302, 351, 390, 427, 428 and 429 cu. in. V-8's.  In 1967, the choice was 289 or 390. There is a message here.  Some of the V-8s will fit without frame or spring tower modifications, but others won't (easily).  The bigger engines (427, 428 and 429) were all offered in later model years when the body was wider.  (The 1967 was 2 inches longer and 2.5 inches wider than the 1966.) The 351-C was never an option for a 1967, so from the chart, it is not obvious that it will fit...... but it will, without modifying the shock towers! Be careful. Don't accidentally get a 351/400M. The deck height of the 351/400M one inch taller than the 351-C. Because of the V angle between the heads, some of this height ends up affecting width. The 351/400M is approximately 1.4 inches wider than a 351-C. This will result in a very tight fit!

If you are going to the local salvage yard (Pick-n-Pull) to get an engine, the top bar in the following chart will help you know what year of Ford or Mercury to look at based on the engine you are seeking. The lower bar shows the years the engines were offered in Mustangs.  Most Mustangs have already been ransacked, so try the big Fords, Torinos, Montegos, Rancheros, and Cougars for the larger engines. I found my 351-C in a 1971 Montego.
 

I have not heard or read of a tight installation due to block length, only width.  While you can put a 390 in a 1967, there is really no need. Next are considerations of weight, width, horsepower. Also keep in mind that the 351-C is less expensive than the big-blocks, are more readily available and have more aftermarket performance parts.

Weight and Width
I have seen several different charts on engine weights. None match exactly. My guess is that is because of the accessories included (or excluded) for the weight. This table is not exact, but representative. The message is the same, though. There are great differences between the  "big block" and "small block" engines. The weights below came from Dave Williams site at http://www.team.net/sol/tech/engine.html . The dimensions for the 302 and 351W came from http://www.therangerstation.com/V8Conversions.html . You can eliminate about 30 pounds by replacing the stock cast iron intake with an aftermarket aluminum one. The aftermarket intakes offer other advantages too. Those are discussed in the 351-Specs section.

¹I measured my 351-C fairly carefully - It is still on the engine stand.  The width is 24" at the manifolds (stock, at time of measurement).  If the exhausts are removed or not considered, the next widest part is at the upper edge of the heads.  I made measurements with the stock valve covers on. They add about 1/2" overall to the width measurement.

² The distance in the chart is from the rear of the block to the front of the stock fan. It is 27.5 to the front of a crank pulley for 2 belts. It is only 25" to the front of the block itself.

³ The height in the chart is from the bottom of the oil pan to the carburetor mount top of the stock intake. The stock carburetor adds about another 6" 
 

Performance
The chart below shows the factory rated horsepower for many of the engines available from 1964-1979. In 1972 the SAE-Net standard began use so the ratings changed greatly. Note that the engine may not have changed at all. The difference is, pre-1972 horsepower was measured at the engine with no accessories. Post 1972 it is measured at the wheels with all the accessories turned on, sometimes subtracting 70 HP.

The intent of this table is to show that you need not get a heavy "big block" engine to turn some good horsepower. You can add a cam, an Edelbrock 4 barrel intake and a Holly 650 onto a 351C-2V and end up with a real powerhouse that weighs 100 pounds less than the big block engines.
 

Bell Housings
The 351-C has the "small block" bell housing and bolt pattern. So, you can get one from a 302, 351W or a 300 6 cylinder in an Econoline or pickup, such as a F-100, F-150, F-250, etc..