Why not get into an '07 or '08 335i (especially if you can pick one up @ an auction price) and mod it?
With an E46 M3, you're looking at older technology (with that awful, jerky SMG tranny
) and a slower car than a stock 335i.
Of course, you could mod the older M3, but you would need a s/c to go faster than a 335i; from what I've seen, modding an older M3 can set you back some serious $$, not to mention a plethora of potential problems. I know a guy with a s/c'd E46 M3 w/ NOS...fast car that's always in the shop for misc. engine problems.
