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Why not use the 3 &3/4 inch length ignition studs they may stick up only slightly more above the nut than stock. This would really be better than backing out the 3&1/2 inch stock length stud. The water neck studs would still be a problem. If you milled 1/16 off the bottom of the head it would raise the compression to 5.9 and solve the stud length problem. There was a discussion about using grade five studs here not too long ago. I know that the grade 5 studs and 55 ft.lb. torque will work good with 5.9 compression heads. I've been running a brumfield 5.9 on my speedster for 13 years with grade 5 studs. The same on my daughters coupe for 15 years. You just end up having to retorque the grade five studs more before they will hold the torque. I used the grade 8 studs on my roadster and torqued them to 65 ft.lb. I haven't had a problem but I just feel now that 65 FT.LBS is way more strain on the 81 year old threads in the block.