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68 Cougar XR7. 302 4V.
1) Need to raise rear end. Are air shocks the best way to go; if so, what do I need to buy and from whom?
2) Considering purchasing/installing 1/2 in phenolic spacer to alleviate (?) strong gas smell after driving/parking car in garage. Does this spacer go between current spacer and intake manifold, or does it go between current spacer and carb?
 

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Air shocks are a bad idea on these cars. They will quickly cause damage to the floor pan where the shock mounts at the top. If you want to raise the rear of the car have the rear springs re - arched or just purchase stiffer ones from http://www.espo.com.
 

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I can attest to Royce's (and many others who have not chimed in) comments - this is what the passenger side upper rear shock mount looked like from the PO using air shocks:

<img src='https://lh4.googleusercontent.com/-uc6ybwL8C24/Thcm1hg-SlI/AAAAAAAAAXM/oMFDpDvsJvs/110708_1.jpg'/><img src='https://lh4.googleusercontent.com/-Li2HfLeT4JM/Thcm18stYRI/AAAAAAAAAXY/RVrVAX-HPU0/110708_2.jpg'/>
And after the structural patching was done:
<img src='https://lh3.googleusercontent.com/-7vuE2p8f0Ag/Thcm199A6jI/AAAAAAAAAXQ/ONl6u_1o_xA/110708_4.jpg'/>
 
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