I have this flywheel in my M20 and it is a great mod, I don't see why an m42 is any different as there are a few different light weight flywheels out there >10lbs for the m42 that are a straight bolt on. If your engine is not currently out of balance and the flywheel is straight, you shouldn't have any problems.
If you decide not to install the 323i flywheel please pass on the sellers information to me, as I am looking for another one.