You need boost if you want a chance in hell. I'd probably boost the 2.5L you have just for the sake of cost/reward.
Swapping a M3 motor in your car will likely cost at least 5K in labour plus the cost of labour (assuming its even possible, which i'm not saying it is)
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2002 TiAg M3 6mt
deoranged, dechromed, led tails, ZHP knob, UUC SS v3, GROM, OEM 220M 19's, Michelin Supersports
2006 YZF-R6, bunch of go-fast stuff