
Christ...now I'm being called a liar. Whatever dude.
I was trying to offer some advice to the OP. He was given two completely opposite diagnosis on his car and he really didn't even give us enough information to give him anything more than an educated guess as to how much work his car will need. In reality, the answer is probably somewhere in the middle of the two "mechanics" who looked at his car. The only way to know for sure what his car needs is to address the problems it has...which starts with pulling off the cylinder head with the blown head gasket.
Recommending a complete engine rebuild is a bit extreme IMO especially if it runs well, doesn't burn oil, there is no coolant in the oil and it has decent compression. Sure, he may need other work done once the mechanic gets the heads off like a valve job but other than that, and a tendency to have a leaky rear main seal, those motors are pretty bullet proof (assuming he has the 302 and not the 2.3l 4 banger-I'm not sure how good those engines are).
Honestly, I wouldn't listen to either of those guys. I'd take it to someone else...someone who works on Ford Mustangs preferably...like a performance shop. If he lived near here I could recommend a couple places.