Yay for answering my own questions.
I also found some good information here:
Most BMW dealerships are obligated to buy many of their lease returned vehicles, certify them and retail them. It's all part of BMW's "Full Circle" retail program.
Dealerships can reject some vehicles, and those will typically be those which are less desirable, for whatever reasons, or those which can not become Certified PreOwned BMWs because of some defect (accidents or high-mileage).
Dealerships don't "negotiate" with BMW. There is a set price, which is sometimes lower than the residual, and sometimes higher.