Thanks so much for your reply! What exactly do you mean by "drift" and "pick"? Is the pick just a type of extractor? I'm really hoping it won't have to be tapped, as hopefully the case's threads are still good... But I doubt it. I've tried pushing the tensioner in, but it won't budge. Maybe I'm too weak in this cold/can't get a good angle (the engine's in the car). I'll add some photos of the situation as it stands.
A drift is like a screwdriver, but with a blunt end. A nail-set is a drift, if you're more into carpentry. It's used for tapping or driving seals, plugs and suchlike.
BMWMan91 is completely right about the chain tensioner. It's just a spring-loaded tube that fills with oil via a very small hole. A one-way valve prevents the oil from flowing back out. As oil cannot compress, the tube is locked and prevented from retracting. With a good bit of pressure you can slowly force the oil back out of the fill hole. It takes a lot of time and a surprising amount of force. BMW requires that you retract a used tensioner before re-use, they suggest a c-clamp or bench vise.
There isn't a lot of space under there, unfortunately. I had thoughts about a similar sized hole saw (take the sheared head to match up the diameter), you could possibly get enough grip to twist it out. I also thought you could pick up a cheap set of chisels at Harbor Fright and use a correctly-sized one to tap into the sheared bolt shaft. If you could work a few notches into the bolt shank without messing up the timing case threads, you'd be in business.
I'm assuming that later year M42s are nearly the same? Would they still be a bolt in replacement? Only asking because this engine's mileage is unknown, has god knows what else that's going to fail on it next, don't have the time to rebuild it myself, and may potentially have the opportunity to get a rebuilt M42 from Bavarian Engine Exchange http://www.bavengine.com/engine.html
There are drastic torque rating changes between the 90-91 and the 92-93, 94-95 M42s on the linked page. What's the difference? I haven't heard or read anything about that before, and am having trouble finding anything.
The M42 went through one major redesign and a few minor changes. They are more or less bolt-in replacements. The blocks and heads are all the same, but the intake and accessories were updated several times. The E36 version also has a different oil pan, dipstick, etc. The later E36 model has an updated "DISA" intake manifold, knock sensors, and updated cam chain case, chain tensioner and a different accessory drive system. The later M44 is a closely related engine, as is the Euro-only M47 diesel.