I just traded in my 2002 325xi wagon yesterday for a 2005 Z4. No problems with the car at all - it ran fine. Put 49,000 miles on it without a glitch - actually it's been the most reliable BMW that I've had (among a 325i, 325xi, 325xiT, and X5). You'll probably be able to negotiate a lot b/c it's harder for dealers to sell wagons - so keep that in mind. I think I got $22k for my trade in when Edmunds showed TMV at $25k, and the dealer originally offered $17k.
Anyway, go for it. Gas mileage was around 28 average, with up to around 32 on the interstate.
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