Dennis,
According to Mike Macartney's "BMW '02 Resatoration Guide" the '02 came with either 121, 121TI, E12 or E21 2.0 heads. The 121 or 121TI heads were available beginning in 1968. He states there appears to be no difference between the two with the exception of the intake valves. The early 121's had 44mm valves v's the 46mm of the later cars. (He also stated that BMW is vague as to when the 121 went to the larger valves.) The primary difference between the 121's and the E12 was combustion chamber size. The 121's had a smaller chamber so higher compression ratios could be achieved. Since the GCR specifically states what the CR should be there should be no advantage to either head in the CR area. Where the E12 becomes the favorite is in the intake valves. The GCR limits you to the 44mm valves unless you are running an E12, which will then let you run the 46mm valves. The E12 heads are considered "triple hemispherical" or the "smog head", it was supposed to ensure a more complete burn of the air/fuel mixture. It has also been explained to me that you have to use head specific pistons (ie: don't use 121 pistons w/ an E12 head) but with flat top pistons I'm not sure why (does this only become relevant when you start using domed pistons...?).
I am running the 121 head on my car because I inherited 2 of them when I started the project. I have yet to dyno the car but if anyone has data to show that one is better than the other, I'd be interested to see it.
So, short story long, the 121/121TI head is legal, just make sure you use the 44mm intake valves.
Steve