If you can't exactly swing the cost of a full dual exhaust, or it's not legal where you live, or you just want something different, then a large single exhaust system may be for you. Large single systems are not unheard of: Pontiac briefly experimented with a large single exhaust system as recently as 1998 on the WS6 (Ram Air) Trans Am. The main advantage of a single system is that obviously, you don't have to run pipes down the passenger side. If you are fearful of moving the fuel filter and/or pump, this is a big plus. You can simply use your stock hangers on the driver's side. The larger pipe provides for a greater flow as well. While it doesn't equalize the exhaust pulses like a true dual system does, it is still a giant leap from the restrictive stock exhaust system.
Now you will have to address the situation up front before you do anything—specifically, the headers and Y-pipe. To get any appreciable gain from exhaust modifications, you will need to install some type of headers, simple as that. For the 5.0L V8, even stock HO Mustang headers are better than the stock Cougar ones. A lot of people are opting for unequal-length shorties because they fit very well and provide good airflow. Equal-length headers are more of a pain to install but will give you a few more horsepower and a throatier sound. For motors 225hp and under, the 1-1/2" headers are recommended. Over 225hp, you can use 1-3/4" headers safely. One big problem for most 5.0 owners is the fact that the oxygen (O2) sensors are screwed into the factory exhaust manifolds. Obviously with their removal, the O2 sensors have no place to go, but you need them in order for the computer to function correctly (and to maintain good fuel economy). MAC does make headers for the 1994-95 Mustang 5.0 that have O2 sensor provisions, so that will take care of that. But if you're looking to have a bigger Y-pipe made, then you may be able to get O2 sensor bungs installed downstream by the muffler shop. This would allow you to use any type of headers. A spark plug chaser has the necessary 15mm thread to mount an O2 sensor, if that helps you. It's your call; fortunately you do have choices.
The Y-pipe, on the other hand, will have to be custom made. It may be worth your while to check into what's legal as far as Y-pipe mods go. The reason is, you may be able to have your smaller pre-catalytic converters dumped and use just one single high-flow converter. This will greatly free up horsepower and offer less restriction. If you're going through the trouble to have a bigger Y-pipe made, go no less than 2.5" in diameter. It should mimic your stock Y-pipe in general shape so that you can drop the transmission pan for your fluid/filter changes. From there back, it should be a simple installation. You can choose any type of muffler you desire. The tailpipe will probably be expensive because of all the custom bends. It is very difficult to make all those bends and still keep the pipe from banging against the floorpan. Still, even a 3" pipe fits comfortably. Remember, if the Mustang guys can do this, so can we.
(Note: If you have a turbo-4 Cougar or Thunderbird and are interested in building a custom large single exhaust system, please see the NATO website for more in-depth information).
This slick photo was provided by Jeff, who installed a single 3" exhaust system on his Thunderbird. He used a Flowmaster muffler with a 3" tailpipe and 3.5" chrome slash tip.