I have been looking into this question of motor sizing for some time and have come to a few conclusions (hopefully for the most part right). I will be very interested in hearing other people’s thoughts on all of this.
First: There are some other issues that get mixed in here. Most GT40 replicas seem to be using the Audi transaxle. This pushes people to a small (302/306) motor because the Audi transaxle was never designed to handle a lot of torque and would make a spectacular hand grenade behind a 427 Windsor stroker.
Next: The original Lola GT was designed in 1962 and the Ford GT Mk1 in 1963. At this time there were no wide tires in existence as yet. The early Mk 1 cars used 6" wide front wheels and 9" rears, and the body was designed to fit around this. This forces the use of what are very small tires by the standards of modern cars (as an example: Roaring Fourties recommends 205 front and 255 rear tires, which is a close approximation of what the early cars ran).
You will notice that a lot of the evolution of the GT40 (and racecars in general at that time) was to making room for wider wheels and tires as they became available. The Mk2 went to 8" front and 9 1/2" rear wheels, and the Mk4 went to 8" front and 12" rear.
One year later, the Gulf cars had flared rear fenders and were running 13" and even larger rear wheels. This was one of the reasons they could match the lap times of the Mk2s from previous years with considerably less horsepower.
The point of all of this is that in a mid engine car, you need large rear tires in order to handle a lot of torque. One reason J-VI doesn't have a problem with his 427 is those 12" rear wheels, if you made him run 9" wheels it might be another story.
If you look at modern cars, the Mosler MT900 (a car of very similar weight and power to a GT40) uses 265 front and 335 rear tires. The Saleen S7 (slightly heavier and with a little more power) uses 275 front and 345 rear tires. The Ferrari Enzo uses 245 front and 345 rears. Porsche GT uses 265 front and 335 rears.
The main thing is that you have to decide what you are building. If is to be a daily driven street car, to be used rain or shine and you want the look of the early Mk1 body. Use a 302/306, keep the max RPMs to 6,500 or less and the Peak HP to 400 or under. Anything more than that and you will go way beyond what the small, rain capable, rear tires can take and you will have a car that wants to swap ends on corner exits.
If you are building the car with the intention of spending some time on the track, or just want it to be the best performing car possible, then you need to go to the Gulf “1075” flairs with minimum 315/35-17 tires (335/35-17 would be better). This will allow the use of an engine with much more torque without the car becoming hard to handle on corner exits. You also need to realize that you are building a very high power racecar for the street, and not try to cut any important corners. This means using DOT Legal racing tires (Kumho VictoRacer V700, Hoosier R3S03, etc.) and accepting the fact that you cannot expect to drive your car at any real speed when it is raining. Yes, you will wear the tires out every 4,000 to 5,000 miles, but that is the price you pay for running a racing car on the street and having it be controllable.
I hope this is of some use and if nothing else I suspect it will result in some very interesting commentary when some of the other members of this forum bring their experience to this discussion.
Kevin