Low 16's is going to take a littel work and a littel more mony.
While the timing will pick up some HP the biggest gains are going to be some 3.73's or even some 4.10's in the rear. About $500 for gears and to get tehm setup. If your lucky you can find a good deal. Can cut up to .5 off your quarter time.
Some cheap power can be had from hunting down some tube headers form a 96+
Half shaft the T-body, cheap and can help.
Save up $200 and have your intake ported and polished, I think rancherlee does them. Good for 7+ HP
Flex's spacer. Garenteed 7+ tourque at the rear wheel.
After that your talking about P&P your heads or doing a splitport swap.
Now for a grand you can do a splitport swap with a cam and some P&P. I was going to do this before I had a chance at a Mark VIII engine. I estimated this setup to give me about 70-80 extra HP. Might be a little high but was thinking
Intake and heads P&P 20+ HP
Come on over to the 3.8 fourm and you will see a lot of ideas and people with a lot more knowlage than me talk.
Also check out 3.8 Mustang
which are sites dedicated to the 3.8 and 4.2 enngines.