Unless the OP is building some kind of street freak or a drag car.....I can't find a good reason for spending the time and money to put an LS7 in that car. I'd rather have a bolt-in Ford motor making less power than go through all that drama.......especially if its my first time doing a motor swap.
I mean, yea......one could build a street grown LS1 that would embarrass an LS7, but it wouldn't be any more streetable than a "balls to the wall" built 302 or 351. I know, I've ridden in a 450+rwhp LS1 T/A. It's not something I'd like to drive in traffic on a daily basis.
Besides.....a Ford motor belongs in a Mustang.
Anything else is selling your soul to the devil........ESPECIALLY when we're talking about a classic '68. You want to do a "heretic" Ford body-SBC combo......get an old Fox chassis or SN95 Mustang. They're a dime a dozen.
My votes:
1. Old school big block..........428CJ
2. Old school small block.......351C
3. Modern day Ford (if you MUST have a contemporary motor)..............4.6 DOHC Mach 1 motor