I have two E36 M3 coupes with the dreaded long brake pedal travel: my daily driver ('98) and my track toy ('99). They have 275K Km and 174K Km on them respectively. A very good friend of mine has a '97 E36 4dr M3 with the same symptoms.
All three cars have stock brake set-ups. We've used with a wide variety of pad compounds on the street and track: Jurid (OEM), Stop Tech (Street Performance), Hawk track pads (various compounds), Carbotech XP-10s & XP-12s, Ferrodo 2500's. Brake fluid gets flushed frequently on all cars using ATE Super Blue Racing or Prospeed 683 (I like this stuff but it's $$). New rotors tried include: ATE, BMW Motorsport floating, PFC Direct Drive & Brembo. Stainless steel lines are installed on all three cars. Small changes / improvements have been observed as components were changed but NONE of the changes have sorted the problem.
My buddy also had a '91 E36 325i occasional track car that did NOT have this prob at all.
I don't subscribe to the over-boost explanation: the math doesn't make sense to me. A lot has been written on various forums describing the prob with a wide range of attempted fixes but little satisfaction achieved at least wrt dual-use cars.
I've replaced the OEM rubber brake pedal cover with an OMP aluminum pedal + a 1 cm shim to bring the pedal on my track toy to the right spot for comfortable heel & toe. It's not ideal but it's better than nothing.