Instead of M30 conversion how about this:
Swap your M20Bxx with a - "......2.8-liter Z3 aluminum block (52 pounds lighter), an aluminum flywheel, aluminum Z3 tubular lightweight exhaust manifold, and the M coupe (smaller) A/C compressor (or just ditch the AC altogether). This combination yields the same weight as an S14 engine from an E30 M3...."
The person who suggested the above was a mr. stuart mchenry...sort of an E30 forum sifu in the states ...his dad pete mchenry of precision performance in winston-salem, N.C USA is supposedly one of THE gurus of BMW engine swaps....
I suppose the nikasil problem is a bummer but wouldnt somthing like this give at least high 190+ bhp and 200+lb ft in STOCK form..... a bit of work on the intake (I have read here and elsewhere some intake swap is a possible upgrade*) + some mild cam + ECU + etc etc should up the power and torque to well over 200+ range.....
M52 is definitely a more modern and sophisticated altenrative to M30 and in the above suggested form will even be in four pot weight range..... have your cake and eat it too??
*shrick intake gives 14bhp increase apparently