The M3 loses to the TTRS in 3 areas:
2. Stock exhaust sound
3. 0-60 acceleration (due to traction)
In all other areas, the M3 is the superior car. There is going to be an inevitable trade-off, no matter what you do, between the steering responsiveness advantage of RWD vs. the traction advanatage of AWD. This is especially true in a front-engine vehicle. The dynamics are obviously different in a mid or rear engine vehicle. To be honest, I am really torn when it comes to this. My previous car was an RS4. While the M3 is clearly sharper and more precise in all its moves, the RS4 has such good grip that you could just slam it, even with all the traction stuff off, and the car would just hold its line. In the end, I am really not sure which is the better. The M3 is more agile and more entertaining. The RS4 has a greater safety margin when driven hard. It will be the same for the TTRS.
Audi S6 * Audi S3 * Porsche Cayman GTS
--Former BMW M3 owner