If the Muncie in your '65 is original, it's probably a wide-ratio and, of that vintage, it's also got the small output. You already know your 502, if you drive the car anything close to aggressively, is going to break that trans.
The question remains, what's the best trans upgrade.
What kind of tire are you going to put on the back? If your fenders aren't flared, your choices are very limited as far as a rear tire which will get the car to hook. Basically, there' aren't any. That will suck much if you're going to race the car at all and even will make it hard to drive on the street in any manner approaching sporting, however---there is a silver lining, because all that pup is going to do is smoke the tires (unless you flare the fenders and put something big and sticky on the back), you don't need to worry that much about driveline as some here would lead you to believe.
If you're not going to flare the back fenders and put big tires on it, here's what I'd do--actually, two choices
1) The configuration we used so long ago on the old Vette Magazine "BBfH" project car would probably work pretty well...the Richmond six-speed, a 3.08 ratio, a properly prepared rear axle, the O.E. 3-in. halfshafts and a 2.5" drive shaft. Now, that said, with a C2 there may be problems with driveline tunnel clearance and trans upgrades having big outputs and larger diameter driveshafts.
2) a TREMEC TKO conversion from Classic Chevy Five Speed. They market several of these and one of them is specifically for a C2. This might work best with an axle ratio change...say 3.36 or 3.55.
Now, if you *are* going to flare the fenders and put sticky tires on the car, beyond what's already suggested above you're going to need to look into uprated rear axle and driveline components.
Also, you'll get to a point that converting to an automatic trans, such as a 4L80-E, might be a better choice, especially if you're going bracket drag racing.
Lastly, if all this sounds expensive and too much of a departure from stock, you could keep the Muncie. If you do that, I'd have it overhauled with the best parts you can find then, once its back in the car, I'd be careful with drag racing style standing starts, WOT acceleration in 2nd and 3rd and shifting at WOT. Do that and the four-speed might last a little bit.
