I've modded my 335i to a point where it hurts
But now it's just the perfect blend between a daily driver and a track toy. I can slap the semislicks on for a trackday and take my daughter to school the next day. Not many cars can achieve that.
However, when I decided to get the 335i vs the M3 three years ago, there's no way I had planned to mod the car to this extent. Other factors were more important: fuel consumption (I can't live with a car that consumes 16l/100 in daily driving), no torque (I like the feel of turbo engines), higher maintenance and insurance costs. The //M just didn't offer me enough "plus-value" to overcome these shortcomings.
So $35k in mods later, I guess the extra fuel costs wouldn't have been so dramatic ;o) But when I do the math, it would at the very least take the following mods to make the M3 equal or superior to my 335i:
Seats, interior mods $4k
In the end it really wouldn't have been cheaper. Would I be happier with such a modded M3? Possibly. Do I envy a stock M3? No way. Cars I envy now would be the 997 GT3 or the Z06. But that's a different topic
My verdict after three years in the E9x scene is: out of the box the M3 offers the better package, at a cost though. The N54 335i has alot of potential but needs substantial mods to turn it into a real sports car. But modding is part of the fun and I've met great people through this hobby!