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Did the engine actually run out of oil or just low on oil? You should get the low oil light long before that happens. Certainly no oil would be destructive quickly. 2 quarts down, probably not.
This engine has been run harder than nearly all S65, but running hard does not usually lead to rod bearing failure. It may lead to a more destructive sort of failure. By the old school standards I am used to, the compression is very high for 9 to 11 psi boost, but the engine sees that for just a split second with a centrifugal supercharger. AA has been running 12-13 psi through the small HKS blower on the 11.5:1 CR S54 in the E46M3 without issue, though VF and ESS with the bigger Vortech blower stick to more like 9 psi.
Figuring out which would help the future modding of these motors.
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