The FE (390) Mustang came about in 1967 to beat the new 67 SS 350 Camaro. The 396 Camaro came about to beat the FE Mustang later in the 67 model year (the 396/375 was 4 speed only that year).
NASCAR outlawed the SOHC because they decided to stop the escalation, they also outlawed the OHC Hemi. Funny, the Mustang was never a NASCAR legal platform, but Ford had Kar Kraft shoe horn a Boss 429 in a Mustang and NASCAR accepted the engine, for a while.
Oh, the Boss 302 took the championship back from Chevy? I thought Chevy was always chasing Ford? So much for that idea.
Wrong on the "pay to play" deal. GM was the official truck of NHRA for years, but there were NO trick "not street legal" GM cars allowed in Stock Eliminator. GM has never had a car listed in the NHRA Stock Car Classification Guide that was not certified for street use under federal emissions and safety standards. NONE of the new Cobra Jet Mustangs are legal for street use. They pass neither emissions nor safety standards. NHRA had to rewrite the primary rule for Stock Eliminator to allow the Cobra Jet Mustangs (and the Drag Pack Challengers later) to race in Stock Eliminator. Ford stepped up to become the "official truck", then demanded a rule change. In fact, just for Ford, NHRA now allows Mustangs that Ford never even assembled, or even paid someone else to assemble, to compete in Stock Eliminator. These are cars that no one ever built at all, that are now allowed to compete against cars that came off the assembly line. That's a new one, never happened before in the history of Stock Eliminator.
The new Challenger is the best looking of the three retro cars, and the most faithful to the original. The Camaro is a close 3rd, but not too close, since the Mustang is a distant second.