I always thought the E46 M3 was the best BMW but wasn't without it's issues to me.
I can sort a lot of the issues out, I always wanted a S62 E39 M5 5 litre V8 in a E46 M3.
Was thinking CSL is the way to go as the next step, BUT how about getting a cool coloured E46 M3 and sorting some of the issues I have with it and then send the car to a guy I know who does engine conversions on BMWs for a living and get a S62 fitted, then sell the S54 motor on and get a bit of money back, I'd have a spot on V8 powered E46 M3 and something different.
The guy I know has done a few of these conversions and says they are awesome, they have so much torque and so quick as well as sound sweet.
Another thought was to do the same conversion to a 330 clubsport and keep it looking like a 330 clubsport so it'd be a bit of a sleeper.