I'd be looking for a late-model M42 myself. Improved cam chain guides, lower-maintenance serpentine accessory belts. The later DISA manifold won't fit under the E30 hood, from what I've heard. Not sure if your oil pan would swap over either - it might - but later M42s got the E36 single-piece rear sump setup.
I'd have a custom exhaust made up - the manifold looks great but IMHO the M42 cat-back is a bit stuffy.
As for handling, I wouldn't go larger than 15" wheels. Five nice light rims with small tires can save a lot of weight. IMHO larger wheels look a bit too modern.
I'd tune the diff ratio to the speeds you'll be driving. My 3.73 is good for highway; perhaps a 4.1 or even a 4.27 to improve acceleration if you do urban drives. Late model Z3s came with a torsen geared diff that might be a good upgrade. If you can find a small-case diff it'll save you 20 pounds. A smaller battery might help - those lithium starter batts are coming down in price and they're a whole lot lighter.
A light single-mass clutch would help.
I'd also optimize the motor with mild upgrades. Do the hose mod (delete the TB heater), upgrade the injectors to 22# 4-hole disc-type, delete P/S & A/C. Biggest efficiency differences I saw was a solid 2.4 MPG improvement after upgrading to 19# 4-hole injectors and the hose mod. I added another 1.1 MPG with really thin oil - synthetic 0w20. I wouldn't recommend oil that thin, however. Used oil analysis reported uncomfortable amounts of iron, lead, aluminum and chromium (cams, bearings, pistons, rings). I run 15w50 now, it brought the wear metals back down.
Install an electric fan to replace the engine-driven one. All synthetic lubes, dilute the coolant as far as you feel comfortable (I run 66% distilled water). I'd also run a higher-temp thermostat. A MarkD chip would finish off the package nicely.