I dont know the details of your questions without just doing the work, but Ill take a stab at answering some of them..
Cutting out convertible braces is a very bad idea, unless your going to take the time to fabricate and re-enforce whatever cutting you do, but it would just be easyer to mod a header pipe than body structure.
Im nont familiar with the k members but you should just look and evaluate, make sure everything is suported, and nothing has a risck of loosing structeral integrity when removing, weather you can do this by using stands on frame locations or possably having to weld in temporary suporting structures shoud be determand by someone who knows what theyr doing.. Mustangs are unitized cars so all the frame rails, Xmembers and Kmembers are very inportant (specialy on convertables). If you dont know much about the frame work in your car your running the risk of serious damage to your car.
You can jack up an engine with a block of wood on the oil pan (a block that is large enough to suport it without caving it in) but you will not be able to lift the engine much. eventualy the engine and trans will run into clearence issues with the fire wall and floor pans.