The M42, from what I understand, is a very reliable engine. Uses double row timing chain, easy to maintain and a whole lot slower than the 325i! Don't know how much better fuel economy you'll get though? I got 30+ is my old 325i and I think I'm getting about the same in my '91 318i... the big difference is that my 325i had a butt load more torque and was a much smoother driving car. Of course those were both E30's, so I don't know how directly that will translate to the E36. Anyhow... there's my two cents for what it's worth!