Just got the most recent issue of "Auto Motor und Sport" (#11), in which they have a half page of info on the E46 M3, as well as a picture of the E46 M3 from the front w/o any disguises. This is the euro-spec M3 -- no idea if this is the car that will come to the US:

The engine will apparently still be a straight-six (contrary to earlier rumors that it will be powered by a V-8). The block will now be aluminum, with a displacement of 3.2 L, unchanged from the current model. Thanks to a higher redline, output will increase from 321 hp to around 350. Transmission will be a 6-speed, with optional SMG whose gear changes should be smoother than currently, due to some intervention by the EMU.

AMS also reports that around the turn of the millennium, the 2.8 L six-cylinder engine will grow to 3.0 L and "more than 200 hp".

Lorenz
<Drooling over E46 M3>