On another note, not sure about the e36 variant, but the e30s had a very nice stainless header from the factory, not a cast type manifold. Thats one option I suppose if you guys dont have that header piece on the e36 chassis... Its actually sized appropriatly as well from my math...
Supposedly the other big problem is the harmonic balancer, but im thinking its more internet wives tale type of stuff as opposed to truth. Its a rubber unit and is one of the major problems when revving past 7200... Conforti has SUPPOSEDLY had these come apart when doing chip tuning, but too many variables like was it an old weather checked unit to begin with etc...
The hydraulic valve train is a bit of another problem past 7200rpm... however a lot of your off the shelf chips (the JC and the EAT) chip limit revs at 7200.
Tearing one down thinking your going to find all kinds of things BMW missed is another problem... these are built extremmely well, all ports are matched, everything is already extremmely close in terms of balancing, and on my mentioned 130k street driven car the bearings were just breaking into the factory tolerance! rings were also at factory spec and the damn cylinder walls still had the factory cross hatching
A few names I can drop are GT-tecknic and Rebello, GT-tecknic was building a full tilt GT2-3??? entry with the m42 powerplant, however as said full tilt with custom FI and/or carbs, custom custom custom was the key on that motor... Ive emailed them a few times but they have never gotten back to me...
There is also another place in Holland that has built the S42 variant which is the race m42 with a 2.0 liter capacity... They sell a lot of custom pieces that they build however I priced one of their harmonic balancers and a standard version was something to the tune of 800 bucks, (not including shipping from holland) and a lightweight version was in the 13-1400 range... So while they probabaly know what they're doing they're going to be spendy parts... (and as already mentioned mostly IT ILLEGAL)