I think most M cars are rated very fairly indeed, but we all know we pay too much for the luxury and brand value, especially with the higher series and M cars. But its not like the competition is any better. Porsche used to be the most profitable car company in the world so go figure... That is why companies such as Nissan are able to make cars that are faster for less money.
The 1M is probably one of the most fun cars money can buy. The M3 is a sensation to drive and look at. You pay a premium for the M3 over the 1M just like you pay a premium for the M6 over the M5. From a technical point of view it is hard to justify the price of any M but the 1M, but we could say the same about Gucci and LV bags. People still buy and love them.
So as many people already said, its all about who you are. If you get a BMW you already pay something extra just for the brand. And if you get an M car, or a coupe or convertible over a sedan or touring, well, then you pay extra for that as well. Its because people are willing to do that, they are coming up with new brands such as this M performance thing (ie M135i) and the new 2 and 4-series designations.