Nothing beats a hpf kit on a e46 m3 in my opinion! With a turbo you could have a 700hp car and actually get better gas milege when not in boost and then let loose when you need to. With a charger your always boosting so your always draining the gas tank at an accelerated rate.
I think its kind of a shame to put a chev motor in a bmw. I love chevys dont get me wrong i drive one everyday but a its just not right in a bmw. Bmw has won numerous engine of the year awards there and they have a wide selection of motors out there. If you want that gut wrenching power and huge displacement go with a s85. If you want to save some doh and have similar performance there doing some crazy stuff with turbo m50's. The problem is that that car is not built for a 500lb engine, Its way to heavy and the car will handle like *hit. I guess if you want a quarter mile car thats not an issue but thats not a bmw! the axles and subframes cant take that much power without serious reinforcement. if you want that kind of power i would recomend a corvette. Even a base c6 is just retarded itll smoke a brand new m3 like its standing still. I struggled for a long time with the same issue and heres what ive concluded: bmw's are not ment to be 10 second cars. There built to have the best of both worlds (Performance and luxury) and they do a pretty good job of it!