It really depends on which 305. The TBI and peanut cam TPI (which was only used on the auto cars with the 305) were always going to be slower. The LB9 305 with the manual (which had a much better cam on par with the 350) had no trouble beating a stock Fox Mustang, just like the 350. Course the LB9 and L98 Camaros were far more expensive than even the most expensive Fox Mustang, which allowed them to make up for it in the cheap mods for them.
But yes, the LT1 was a huge upgrade over the TPI engines thanks to the better heads and intake that didn't run out of airflow after 4.5K RPM. There was only 1 guy with a Fox that I knew that could keep up with my LT1 and we spent a good amount of time racing each other after one mod or the other to see how things went.
Yeah, of course it didn't take much to wake up a Fox, they were very light and a notch with 3.73's and underdrives and maybe exhaust was a 13 second car. Heck, my stock T-top was ~99Mph stock with exhaust and ran 13.8 @ 101 with a set of underdrives, aluminum DS and an e-fan on it, totally stock engine, and that was the heaviest fox you could get besides the convertible.
From what I recall, the TPI 5spd was a 14-second, sometimes 15 second car, I assume because the Camaro was heavier than the Mustang.
Of course like with most stuff produced during that era, there was massive variability in performance. My buddy's '89 hatch ran mid 14's at ~94Mph, so it clearly wasn't putting down anywhere near the power my '87 was, which always trapped MUCH higher.
Most of my Fox friends went forced induction and were all running 11's, lol. I was the only one who did H/C/I and stayed naturally aspirated, in large part because I had young kids and couldn't afford it! hahahah. My one buddy is still into it, he was on Pinks all out with the engine out of his notch in an '82 Capri that ran 9's like clockwork.
What great times!