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It is his car, let him turn it into a frankenbimmer. It is no different than what a lot of other people are doing. It is not for me, but I am always interested in the final result. Look at Dimitris' M3 conversion, he got dumped on hard for that and now it is coming together nicely.
As far as money spent on performance, a few HPDE track days would probably make you faster than some of your choices. The 335i racing exhaust is a waste as your car wont have enough back pressure to make it effective. I would put the PE on instead and take the extra cash to the track.
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