I think option 2 (N55 turbo) will be the route M division will take. As per the reliable SCOTT26 (http://www.m3post.com/forums/showthread.php?t=425589
) and comments made by Dr. Kay Segler on the issue, the S65 V8 and any other V8 is sadly not an option and these rumors are pretty much squashed. You people also forget that the S54 from the E46 was derived from the M50 engine line as was the previous engine for the E36. M has used production model engines as their basis so I don't know why the antagonistic response to using a production line engine for the F3X M3. Should they use an inherently unbalanced V6, consider my loyalty tested... I'll have to see and judge that car for myself should it happen but it surely would be a sad day in BMW history if they use any V6 in any vehicle.