It took a week longer than I intended, but tonight I finally have my stereo updated in my newly acquired 1994 325ic.
There don't seem to be a lot of posts dealing with the convertible, so I thought I'd share out my solution for others who come along in the future.
Following the advice of others I went with a 2-way component setup in the front (5.25 inch kicker panel and 1 inch tweater in the door) and just dropped the 4 inch door speaker.
In the rear I put in a single 4 inch coaxial, and dropped the 1 inch tweater.
Behind the rear passenger seat I replaced the stock amp with a 4-way 50 watt amp.
Behind the rear driver's seat I mounted a 350 watt mono amp.
I found a stealth-box (designed for trucks) with a 12 inch sub that mounts to "flush" with the factory CD player, meaning it sticks out about 1/4 inch from the wall of the convertible boot. Only way to mount the sub was downward firing.
I removed the ski-bag from the rear passenger seat and I kept the stock head-unit and CD changer (for now).
How's it sound?
Incredible! I haven't quite gotten it properly tuned yet, so it's a little bass heavy, but at freeway speeds with the top down it just sings! It is literally a brand new experience over the stock speakers and amp, which were factory original.
The bass line is *more* than adequate for any sane person. It might not be competition ready, but as a daily driver it's amazing.
My only remaining issue is that the cd changer has a tendendy to skip. It's not from the bassline or vibration though, as it skips at odd times, and I'm fairly positive it's not caused by the disk either. *shrugs* So that's a problem for another payday.
Thanks to all for the advice and ideas. I'm INCREDIBLY Happy with the results.