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Below is an rpm comparison for you with your prospective T5's specs (and 29" tire). My T5 had a 3.97 1st gear with a 3.73, so almost the same final drive ratio for 1st gear. This was a BIG concern for me, but it turned out to be not that big of a deal. I could start off in 2nd, but for me personally, 1st gear is what I normally used - I had to shift pretty soon after starting - about 3/4 of the way thru a big intersection, for example, but it was ok for me. For your tastes, you'll have to judge for yourself, but it was less of a problem than I thought it would be.
I'm not sure which bell housing index ring is stock for a 68 - but if it is the large one, you can use one of these to correct the problem (i.e. the good news is that the T5 has the smaller dia, so you can adapt):
http://www.advanceadapters.com/produ...-down-to-4686/ (it's an index ring reducer from Advance Adapters - $25).
I bought a new stock flywheel for the engine I was putting it onto (a 283 in my case). Probably need to have someone confirm that your I6 has the same or both bolt patterns on its flywheel before buying. An I6 guy on here could probably answer that - I don't want to say that the Astro Van pressure plate will bolt directly to the stock I6 fly if I'm not sure of it. it is NOT the case that you should buy a flywheel to match what the trans came from - that's not relevant. The key is two-fold:
a) the flywheel must be able to bolt to your crank, and
b) the pressure plate you buy must be able to bolt to your flywheel (and the clutch disk and release bearing should be matched to the pressure plate - that's why I recommend a kit)
The spacer plate you posted a link to is a nice one. This one also works (and the Vintage Metalworks guy is very helpful and informative if you have specific application questions):
http://vintagemetalworks.blogspot.co...ter-plate.html
My advice: might consider continue searching for a different T5 (if you choose the T5 route), because the .86 o/d is not a lot of bang for the buck (BUT, keep in mind that a 3.42 is already a very highway friendly cruising gear, so this might not be a bad thing after all....). While the 4.03 1st gear doesn't sound ideal, it's doable with a 3.42 rear gear. What you have will work - but I'd only do it if you are comfortable with the 1st gear and cruising rpms you see in the table below.
However, if you plan on hot-doggin the future LS at all, I'd also recommend skipping the non-WC (or even a WC) T5 and save the 1-time pennies for a TKO. Any T5 won't last long if you like to dump the clutch and do burnouts. Hope that helps!