I run a AFE (Advanced Flow Engineering) Stage 2 on my diesel below. In the diesel community, the K&N's are not much-loved, primarily due to anecdotal stories about people with 'dusted' engines due to insufficient filtration from the filtration media. On my particular setup, I use a more expensive version of the filter, plus a pre-filter sleeve.
I always felt the K&N intake kits were good and I think the benefits of higher air flow in an open-element setup are clear. They work most convincingly, in terms of power gains, if you pair the intake upgrade with a corresponding exhaust upgrade. On my oil burner, that means a 4" mandrel stainless from the turbo back. On a gas motor, that would translate into headers and a quality 3" exhaust and high-flow mufflers. Remember, you have to open up the breathing on both ends. Once that is done, I suggest more fuel! Now that you have better air flow, your engine should be able to, generally speaking, handle more fuel, which means more power. If it is for your '78, I'm assuming there are no computers involved and we are dealing with a carb setup. I am, by no stretch of the imagination, a carb guy, but perhaps someone here can chime in on whether you can richen up a bit and maintain reasonable stoichiometry. If this is a computer vehicle, consider a programmer or chip to complement your intake/exhaust mods.
If you are worried about filtration quality, slap a pre-filter sleeve on there. You can booty-fab a pre-filter sleeve from quality panty-hose.
