Good advice. TBH, if I could have my cake and eat it i would have a e92 335i m sport or even better sport plus edition, that would be my perfect car. It looks good, reasonable to insure, service etc and with some slight modification it would have M3 pace and I prefer the power delivery from FI rather than a big V8.
It is also less in your face than the M3. Also keeping the 320i isn't the end of the earth but I would end up buying a cheap Zed and as I only do around 3-4k miles per year I would hardly use either.
I think I'm going to go and speak to the BMW dealer again and see what I can come up with!
I'm not holding my breath though, as a e92 335i in alpine white in m sport or sport plus edition is very, very rare unless buying new!