£8k more for 48 bhp is a lot, but if drives like an E30 M3 could be money well spent.
Personally I'd dump the rear seats and all toys, add carbon fibre roof, boot, doors and bonnet, loose as much weight as possible and make it driver focused, the current 135i is close enough in terms of performance to satisfy those with comfort needs. I'd aim the M1 at a small niche and call it the 135tii not an M1.

Here for a good time, not a long time