I think you should get at least 12 to 15 mpg with the 350; my 77 w/454 and TH400 got 10 mpg, unless I was towing a trailer, then it got 7.5.
On the Tail gate issue... I get better 1 MPG with it up (based off 1000 mile round trip). [i'll be doing more research on this later].
Here is why I THINK (emphasis on THINK, as i'm just a dumb Marine), that a pickup would get better gas mileage with the tailgate up:
1. With the tail gate UP, the air flows over the front of the truck and cab then drops into the bed. When the truck is up to speed (stable speed), the air starts rolling inside the bed between the truck and the overhead airstream, this acts like a bed cover. This also forces the turbulance up off the back of the truck, which reduces the drag.
2. With the tail gate DOWN, the air stream flows over the truck and out the back, where it causes turbulance, so the truck is constantly fighting the drag.
