I've done it both ways and to two relocation dimensions, 1" and 1-1/2".
First off, what the lowered upper arms does is keep the tire tread closer to flat when the car leans into the turns.
Normally what will happen with the stock location is that the tire would lean out on top, putting the tire on the outward edge of the treads.
Optimum lowering was debated but is somewhere around 1.75".
The Shelby drop of one inch was done simply for one reason. It uses the stock ball joint without any modifications.
To go more then 1 inch, you need a wedge shaped spacer under the ball joint to prevent the stud from bottoming against the slot in it's hardened metal cover.
I use the wedge spacer. 1-1/2" drop works well.
Second. Springs. The "Shelby" drop was originally done with the stock Mustang HP springs without cutting them. Also, be aware that there are two "Shelby" patterns. A late and an early.
It DOES lower the front of the car not exactly at 1" but somewhere around there.
The springs that I am using are the ones recommended in the Boss302 chassis modification booklet. They are originally sourced from a Ford truck and in order to get them to 680lbs/inch of compression, you need to cut them. That means hacking off around one full coil.
Now initially I did that and it made the car WAY too low in the front. You couldn't make a fist and slip it under the front radiator support. For a Trans Am car, using the Bud Moore oil pan with the built in skid plate, that's probably ok?
What I did was take a 1" Mr.Gasket doughnut rubber coil spring spacer and install that to shim up the spring .
This combination gives me adequate fender to tire clearance with a BFG 235-60-15 on a 15" 10 spoke wheel.
Here's a picture.
Now in all honesty, Jim Cowles was the only one to notice the car being lower in the front and that was only because it was at a SAAC car show with all the other 68s lined up against it.
I missed my opportunity to measure the difference that day but it seems to be about 2-1/2" lower at the header panel in front then stock.
My recommendation would be to go my route. It's will save you a lot of unnecessary work and disappointing discoveries and put the car just about where you want it to be both in looks and performance. Granted I'm prejudiced about my own work and solutions but let me just say I've been doing this stuff since I got the car in 1972 so there were a lot of dead ends I had to run down on my own since no one would readily share information back then?
Let me just add one more thing, the combination of this lowering combination AND the radial tires IMPROVES the ride quality of the car DRAMATICALLY! OH, almost forgot, you need to do a "bump steer kit" with this otherwise the bump steer can be SO BAD, the car will change lanes just hitting seams in the pavement. Sometimes, it will want to do a 45 degree turn into the guard rail...all by itself without even moving the steering wheel.
OH yea! It hated the Merit Parkway in CT most of all!