You can do it, but it's more than just installing the right water pump. Ford changed
the external parts of the 302\5.0 quite a bit between pre 1978 to 1979 and later.
Let's see if my memory is any good. The long block essentially is the same. Assuming
the "new" motor is NOT an HO you need to use the "old" style: Timing cover, water
pump, harmonic balancer(??), pulleys, accessories, and brackets.
 If you are staying with a carb, the intake will obviously be different as will the
oil pan and pickup tube. You will need to use the old pieces.
  Use your old exhaust manifolds. There are air injection ports (smog pump) at the
rear of each head that will have to be plugged. They are usually tapped and can easily
be capped off with pipe plugs.
 The spark plugs will be a different size and thread pitch. You'll need to do some
cross referencing to find the correct plugs. (small plugs with a narrow gap for the
point type ignition, in the correct heat range).
 I don't think you can do this with an HO motor but I don't recall why and could be
wrong. The firing order is different but IIRC there are other mechanical differences.
Maybe someone with more knowledge or a better memory will chime in on this. Of course,
part of what makes an HO an HO is the fuel injection. If you are going to use the fuel
injection, regardless of which engine you have, I would stay with the newer accessory
train. (FI is a great mod for an older car. It takes a bit of work though).
 In short, strip your "new" motor down to the long block (block, heads, and
reciprocating assembly). Install all of the missing parts from your old motor.

 As for deleting the power steering, the only advantage on a driver is fewer parts in
the steering system. Again with the memory thing, I think the 68 had "linkage" type
power steering. There is an external hydraulic ram and a control valve on the center
link, as opposed to a recirculating ball steering box. There are lots of places to
leak and parts are (used to be?) pricey.
On a race car, it would be less load on the engine and less weight.
 If you are going to drive the car for pleasure I would suggest keeping the power
steering if you can. Have you ever driven a car without it? Many folks today haven't.
Down the road is ok, but parking lots can be a bit of a challenge. There's a reason
that power steering became standard equipment ;)
 Good luck with your swap. That Ranchero is a way cool ride, I've always wanted one.
There is a fellow who posts updates here about restoring a 1966 Ranchero XL. Drool...

IIRC, you have to change both the water pump and the front
cover along with the drive pulleys.  You must also use the
correct damper for the engine as they are balanced
differently.  IOW, you cannot interchange the damper between
the two.  The so-called adapter to convert to manual
steering is just an idle pulley to replace the PS pump.

If your Ranchero has PS, I suggest you simply have a
pressure hose made to use the late 5.0L pump.  The steering
gearbox won't know the difference.  All that said, there
really is no reason to use your old auxilliary drive system
unless you are concerned with appearance.  The later
serpentine drive is superior and you won't have to worry
about all those changes tothe engine.  If you don't use the
air pump, just get a shorter belt which are readily
available.  The alternator setup is easily adaptable to your
electrical system.

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