My '86 GT muffler has 216,000 Michigan miles on it (according to the PO). The engine is out and I have a brand new "free" Maxi lifetime muffler. The original does not have any holes in it and sounded ok during the brief time I had the motor running. (About 5 miles before it died.)

I think the original is stainless steel and the new replacement is mild steel. Should I put the new one in or wait untill the old wears out?

Also, the cat is original also. When I cut one of the pipe leading out of the muffler off (it was bent in an accident) it had about 1/8 inch of black soot in the bottom of the cut pipe. What is the general feeling of cutting out the cat and replacing with straight pipe?

After 200,000 + miles the original muffler's time is up. Stainless doesn't mean lasts forever. The cat is probably shot, People have replaced them with straight pipe. But it depends on your states emission laws as to the need for a cat or not. Then there are places where you can get an empty cat "can" so that it looks like a cat is in place. Then there are the questions as to the environmental concerns of unburned hydrocarbons released from not having a working cat. Your choices.

Since the engine is out, now would be the best times for work on exhaust system, headder installs etc.