I'd remove the black-out tint on the lights. It's tacky to me, but that's just my own opinion. To each his or her own.
I purchased an E46 because I decided I didn't want to save more for an E92 335i. I don't regret the decision one bit. It has some high mileage, ~95k, but it's in beautiful working condition save for some minor repairs and no dings on the sides. I'll use it as a trade-in later when I graduate, but I'm loving the E46 experience right now. Great first BMW.
Things you gotta look out for on this car since it is above 100k:
1. VANOS seals. You won't know if they are bad until you get the symptoms (erratic idle, hesitation at 4k rpm, worse gas mileage than usual). The seals BMW provides really suck, and there are great aftermarkets by Beisan Systems available and an incredibly
detailed DIY on installing them. See here:
The DIY looks scary, but the process is supposedly much easier than it looks from what other forum members have said. I'm probably going to tackle this in ~7-10k miles on a weekend once I get the proper tools.
2. Water pump and expansion tank. They tend
to fail a little over 100k. Make sure they have been replaced. If not, do that immediately. The engine will overheat instantly when those go. Not a fun time.
3. Control arm bushings. Have they been replaced yet? They wear relatively quickly.
4. Are the window regulators all working? Early builds of E46's had failing window regulators.
That's all I can think of off the top of my head to really look out for, but check E46 Fanatics to get more info before buying. http://www.bimmerfest.com/wiki/index.php?title=BMW_E46
is your E46 bible. Other than those issues, they're really reliable and are a blast to drive.
Also, $8k is certainly too much for a 328Ci with 120k miles and those mods. Try to get it down to $6-7k.