Regarding the transmission: are you sure it's a C3? To the best of my knowledge, I believe you should have a C4. If you have a C3, that would make a bit more expense on any swap to a 5.0, though it would definitely be worth it. You would probably want to get a C4 or AOD to go along with the 5.0 (if you go with AOD, you might be able to find a donor car with a 5.0 and AOD). Going AODE could get rather complicated, so you might not want to go there. If you get a transmission and engine separately, be aware that the transmission you get may or may not have the right bellhousing.
As for the engine, you can install a 5.0 with your stock k-member, but it will take a little extra work because your car started out with a straight six. Because of the extra length, your engine mounts are actually located a bit farther forward that they would be on a straight four or V-8 car and the k-member engine mount flanges extend farther forward to accomodate this. There is one person on this forum (he also posted frequently at the Fairmont area on the old forum at ford-forums.com) who has dropped a 302/5.0 into a Faimont without changing the k-member. His screen name is stymees'mont. If the old forum hasn't died yet, check it out. The short version is that you'll need to trim off the forward portion of the driver's side engine mount flange on the k-member to make clearance for the 302's oil filter and you'll need to use F-150 engine mounts.
Regarding the wiring harness, depending on your budget, you can either modify the stock 5.0 harness or you can spend roughly $500 for a trimmed-down harness from a retail supplier or Ford Racing Performance Parts.
As for the k-member, you can install an aftermarket k-member if you don't want to trim your stock piece. An aftermarket k-member will also shave some weight.
That's all I have time for right now. If it were me and I had the money, I'd definitely go with the 5.0. Right out of the box, you're looking at 225 horsepower in a car that weighs less than 2700 lbs and, or so I've heard, you'll get about 24 mpg overall agerage. Compare that to my wife's '02 Impala at approximately 3500 lbs with 180 horsepower and the same 24 mpg! BTW, she bought the car while I was deployed... I never would have allowed her to buy a Chevy!