Well, what motor/trans? What bodystyle: coupe, vert, FB?
Personally, and I think most would agree, the brakes need to go and be upgraded to at least a front disc kit. Than clean up the suspension with a Grab-A-Trac (or equivilant) suspension from Welcome to Mustangs Plus on the Web! Your Mustang Parts Source!
. from there where you go is your choice. Just keep in mind, anything more than a 302ci will be "fun" to install and even worse when you need to do a tune up. I have done a bit of research on the 351 swap into a 66 (same as the 65 in dimentional respects) and it's a little bit of a process.
IMO, the 289ci they had is a good motor and the I6's are damn near indestructable. The 289 winds up really good and will sit you back in your seat, so with a few bolt-on's you should be grinnin from ear to ear. I have an 200ci I6 in my 66 coupe and it's a great motor. Nothing with serious speed, but great for a DD. Mine has about 275,XXX on it and the only thing that has been replaced was the cam (the guy who had it before me tried to race it with no oil in the motor) and I'm in the process of replacing the exhaust mani. The set back is the bolts broke off from being so old.
As for aesthetic modification, you can ask for advice so tell us what you wanna do, everyone has their own ideas of how things should look. So, with that said, my best advice to you on that is either just do what you want or be prepared to hear people tell you they think it's a dumb idea. Personally, I like the E2 body kit for my 66. Everyone tells me it looks like shit and everyone has them so they are played out. I'm putting my own spin on something I think looks good and no one can change my mind on that!
Good luck with your project and keep us posted.