1. can the frame handle around 400hp 400ftlbs? i know the older ford trucks, the frame was meant to flex is this the case with the chevys also?
Yep (flex). You can see it between the cab and bed when on a rough dirt terrain.
2. what is the best method for the rear suspension? i am looking into a new rear leaf kit with a 2-3" drop, but im also looking into the 4-link.
Leafs ride the best. You can lower the rear easy enough as well. Coil over with 4 link is cool if you dont mind the ride. Younger guys usually cant tell the diff
and yes I used to be a younger guy.
3. is the mustang II one of the best options options for the front? i know i want a IFS but there are other options out there and i would like to hear about them.
MII is the easiest IMHO. You can do a volare front end with torsion bars. But you'd have to know what your doing. You can graft a camaro front end on, but I have seen people do this and make it TOO low and ruin their frame. Mustang 2 is the norm however.