There are several good reasons to run a larger capacity pan. The larger capacity generally means a deeper pan with a lower sump.The number one reason to run a deeper pan is to get the oil off the crank. If the crank is beating up the oil, Its costing you power.If you free up some hp in the pan, you will have more power to propel the vehicle.
The only reason to run more oil in that pan, well one of the best reasons to run more oil in the pan, is to ensure the pick-up stays submerged in oil. Rods dont survive long without oil. So, if your pumping all the oil to the top of the engine and/or its not getting back to the pan fast enough, extra oil in the pan may save your engine from self-destructing. Of course solving your drainback issues and/or top end over-oiling,should be a priority.
These oiling issues usually only show up at higher rpms. With stock engines, the factory has it pretty well bugged out.But when you start pushing the envelope, you, the builder have to think ahead.
My little 366 only has a 230* cam in it. this size of cam usually hp peaks around 5600 give or take.This, depending on the trans ratios, requires a redline shift of around 6300 maybe a little less.But I like the sound of that little LA screaming its heart out at 7200. And the Hughes cam is still pulling pretty hard up there.So I engineered that engine to survive at that rpm, not because it needs to,but because I want it to.Im running adjustable aluminum rocker arms.They like a generous oil supply to survive street duty. So I modded the oiling system to give them what they need. Unfortunately, my Eddies seem to have lousy drainback. So I cut drainage channels in them, in an effort to get that extra top-end oil back into the pan. But with all that oil now going to the top, I had to think ahead to the rod supply. Extra oil in the pan seemed to be a good solution. Well to keep that extra oil off the crank, a deeper sump was mandated. But on a streeter, running a lowered suspension, theres not much room below the K-member,to run a deep sump.So the best solution for me was a roadrace pan, with side pockets and a 1 inch or so deeper sump.This lead to the 7qt Milodon Roadrace pan. Seems to be working, cause the al.rockers have nearly 125,000 miles on them, and have only required 2 or 3 adjustments during that time, despite running only 1/2 turn or less of lifter preload,in more than 10 years.
Hope this helps