carter's right... but i don't agree 100%...
first off, get a chip from turner motorsport, not an ebay chip... bunch of little reasons why i'd rather go to turner, bav auto, or some other tuner than ebay
second, i wouldn't go any higher than a 3.45lsd in the rear. any higher than that & you're really hurtin your gas milage more than you probably want for a street car.
third... yes... you can do a 325i head swap. it's not a direct bolt on though & works better w/ a 325i intake manifold, TB etc. my plans involve picking up a beat 325i & rebuilding the engine w/ an eta crankshaft, eta connecting rods & either euro eta (1st choice) or super eta pistons. that'll HOPFULLY put me somewhere around 185-190hp & 210 or so ft/lbs if i do it right
although, since we're both pretty much in the same boat right now as far as mods (all i have is a bav auto chip, which i'm plenty happy w/), i suggest doing suspension work first, then going to more serious engine mods
