Howdy Man,
I'm 19 and bought my 65 Falcon Ranchero last year. It's got a 200 though and the 3.03 column shift in it, 66 mustang 8" rear end.
As a side note, it's not as simple as dropping in a V8 with these cars. If you watch Fantomworks, he does an episode where they change a 65 or 66 mustang from a L6 to a 289 and you basically have to change everything. From the trans, to the suspension. Your paper trans will blow apart with a v8, your rear end will bite the dust. You'll need to upgrade your front end b/c of the extra weight. Brakes are a necessity so you'd have to go get either bigger drums all the way around or go disk front and drum rear or 4 disk. When you bought a v8 falcon, the setup is completely different than the L6, and not everything is bolt on switching. Also you'll need to reinforce the body a little since these don't have frames and ford had a great idea of putting a small torque plate above the trans to fix this, it ain't really enough. I'm not saying don't do it, I'm just saying it's not as easy as just drop in an 8.
Next up, the 170 can be driveable, it's like a slightly less powerful 200. For starters I recommend going to electronic ignition and getting it curved properly, there's a guy here named wsa111 he can hook you up.
Then is timing, best to do is to start at 10° initial, using a timing light, or go by vacuum method, use the method that someone else here said about turning idle down low.
Now what kind of carb do you have? If yours is an autolite 1100, take it off. By changing the distributor odds are you probably can't run the carb unless you block off the spark valve. I tried running one of these on the 200 and it didn't like it but I don't think I had the original distributor (loadomatic). You can possibly go to a Carter yf, Holley 1940 (make sure it doesn't have a spark valve since autolite made an identical one), or my fave a holley 1904. My 1904 is off a 52 F1 215 or 223, not sure. Or you can step it up big and do the weber 32/36 using an adapter, which vintageinlines.com sells. It's a 2 barrel carb that works progressively, meaning it runs on a single bore until you floor it, then the second one opens. I have a video on this, check YouTube for weber conversion for ford 200. It's basically the same thing but your jet sizes will be slightly smaller, probably 1 size or 2 sizes smaller. But then you'll need to rig a cable pedal setup rather your mechanical pedal setup, I'm still working on that. The mechanical works If you adapt it but it won't open up completely when floored, which is why the cable will be needed.
If you're scared of the trans failing then you could possibly switch In a 3.03 column shift out of a v8 but you'll need an adapter plate. Mine was already like this when I bought it. DON'T DO A FLOOR SHIFT OUT OF A MUSTANG, it won't fit right. You're shifter will be in the bench seat or in an awkward spot if you have buckets. Or go wild and do a t5 swap, 5 speed manual with a nice overdrive for highway; modern driveline has a whole kit for our L6 falcons. Or you could go for a c4 which will bolt right on but you'll have to modify or find a column shift steering column for an automatic (shouldn't be too hard)
The rear end, if stock sucks. Mine just quit, someone switched the original 7.5 Ranchero rear for a 7.25 falcon, why I don't know. These tend to chip teeth and break easily. Rebuild kits exist and have all the necessary gaskets and bearings but if it's anything like the pinion gear that has anything wrong with it you're toast, unless you find a donar from the auto wreckers or something. New pinion gears don't exist and nos are like hens teeth. Its best if you switch it for a ford 8", that's what I did. Although my gearing sucks, 2.8 on my 3 speed, I definitely don't have the probs i was havijng with the old one. If you get an 8" from a similar year mustang or falcon it'll be bolt in but you'll have to set pinion angle, don't forget that. The brakes will be bigger for the 8", you'll probably have 10" drums. Also at that point odds are you'll have 5 lug rear and 4 lug fronts, also my setup until i decide to do front disk. A 70 or 71 maverick I believe have 4 lug axles but the spring perches or something is off b/c it's wider. Also the driveshaft will need to be modified at the rear for the 8" yoke, any driveshaft shop can hook you up, it cost me $140 To get it cleaned, painted, balanced, and have the weld work done to it. These people like to see us younger guys keep these cars going to sometimes they give you breaks and deals, it's nice.
If you have any questions or anything pm me or respond to the message. I'm still learning about all this (I went into this 1 year ago with almost 0 car knowledge) and I had to start by replacing every part of my brake system. You'll learn with time as I have. You could possibly look into getting the Falcon performance book, its roughly $25-$30 depe ding where you look, but it's gonna say similar things to what I've said but it gets into more detail like engine mods too. It's cheaper to do the outside stuff since engine stuff gets pricy fast.
These were made to run forever man, as i was once told, if you have faith in that engine, it will not fail you. It may not be a 428 cobra jet, but it gets down the road nicely and with decent mileage.