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I like the E46 M3, even looked into getting one, but there isn't a whole lot you can do to mod it, it's basically tuned at it's optimum level from the factory, so there's no squeezing another 100hp with a few hundred bucks in tuning. Expect to spend a lot more on mods, but as you said it's decent from the factory. I looked to the Audi B5 (2000-2002) S4 2.7 biturbo, which I owned for a few years. When it was chipped, it felt a lot like driving a Z, except it got traction. And by traction, I mean rain or shine, the AWD hooks up. You pull up to a Z06 in the rain and dust it. It handles amazingly, and when you expect there to be a nice kick in the butt with the turbos, you get it. They spool fast and hard, and I pulled away from many-a-E46, straight or curvy. Plus, they look great imo. But again, mods can get pricey, and basic maintenance can get expensive as well.
Cheers,
JBrobst 
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