As we all know, the stock US 320i 4-cyl engine is weak by today’s standards, so I got the idea that it would be really fun to put a more powerful engine in that light E21 chassis. Why M20B25? Like all M20s, it’s easy to fit physically since there was an E21 that came from the factory with an M20, and the M20B25 is the most powerful of the M20 family and has the highest potential for upgrades. It has relatively modern electronic engine management which is very self-contained and thus easy to swap in (unlike newer BMW engines, whose management is integrated with other chassis systems, which makes them more difficult to swap into an old car). M50/M52/M54 motors may also be reasonable choices, but will involve additional difficulties, specifically related to the transmission and driveshaft… and possibly electronics too. But they do have a more modern design (24V, variable valve timing, etc), so they should be considered too (and some of the info here will apply to them as well).
Here’s my full write-up: