I have an 86 2.9 and it starts right up every time, hot or cold my problem is that I lose power going up-hill, I will be going 45-50 mph and then hit a hill and half way up it losses power and slows to about 30 mph and then a lifter starts knocking and gets pretty loud by the top of the hill but once the road levels off the power is back and within a couple of miles the lifter noise goes away.
I have had the fuel pressure checked, replaced the 02 sensor, fuel filter and catalytic converters, The diagnostic came back with an EGR code but the mech said that wouldn't cause my problem and I pass emissions with no problem. The engine doesn't backfire but sometime when it first starts up the idle will go from 900-1000 and drop to around 300 and then back to 900-1000, it will do this a few time and then it will be fine it only happens right after I start it up. Any ideas? I'm stumped...

That lifter knocking comment is curious, but are you sure its only one lifter knocking? or maybe its not a lifter? I have an 86 and I know all I have done lately, but this knocking I have not heard. I have heard a V8 engine start knocking when it was working hard and that was caused by a stuck thermostat and the engine was beginning to overheat ( I shut that down quick and pulled the thermostat). This kind of knock can be mistaken for something else. Have you done any other maintenance according to the miles on the vehicle. Mileage usually gives a hint about things but too many people don't mention the mileage. Has the mechanic actually heard the knock? Anything else you can give?

It has 148,000 miles on it and the knocking that I hear sounds the same as the hyd. lifter noise I used to get in my old mustangs.

its probably just pinging from lugging up the hill. is it a manual?