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I've not done it myself, but remember the Fan Swap idea. Changing the engine cooling fan from a belt-driven fan to an electric fan is supposed to be a pretty significant mod, around 1 - 2 MPG. When you're talking in the 10 - 15 MPG range, that's pretty significant.
Another large one (regardless if you're keeping the stock engine in it or not) is Water-Methanol Injection. If you can get it set up right to cool the cylinders considerably (and don't mind the extra expense of the Water-Methanol mix,) you can then advance the engine tuning by a significant amount. Doing all of this increases engine power, reduces fuel use, and keeps the pistons much cleaner.
As for if the car exhaust stinks, perhaps I'm not the best to ask, but I get the general feeling that it's just how these old cars are in stock form. Unless you install a much newer catalytic converter that's going to be much more efficient (and do you want to put that money into it?) Pre-1990s Cars might just stink up the neighborhood. My 1990 Grand Marquis Wagon is the same way, and so was the 1984 Caprice that I had. They're from a time before air pollution was cared about to as significant of a degree.
Whatever you do, I'd suggest you upgrade the brakes (and brake fluid) first if they're not already done. The car's going to have drum brakes in the rear. While that's all well and good in many braking scenarios, you also don't have any way to cushion your head if someone were to do the unthinkable and (stupidly) hit you. You don't have automatically deploying air bags in this Lincoln, and I don't in my Grand Marquis, either.
I'd suggest you switch over to Amsoil Brake Fluid, at least, for the much higher boiling point.
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