Hi there,
About four months ago, my 2001 325Ci had similar symptoms, in terms of wildly varying blower speed (although mine never stopped working altogether - and being in Southern California, the temperatures weren't as uncomfortable as yours

). The following post might be helpful (in particular, Dirty Tool posted a link to some pictures):
http://www.bmw-forums.com/forum/index.php?...topic=17238&hl=
I'm very non-mechanically inclined, so fortunately my car was still under warranty. Took it to the dealer, told him the problem, and his first thought was the so-called 'final stage'. After he replaced it, the climate control's been fine.
Hope that helps...
Cheers,
Mat