I owned a 2002 with SMG. I am a F1 fan and waited 1 year to get it. It shifts like Michael Schumacher or Juan Pablo Montoya(at the time for BMW) with 11 different modes 6 manual modes where you have to use the gear lever or paddles on the steering wheel and 5 modes that are automatic. In auto, it still feels like a stick shift without having to do anything. It can get annoying in traffic as sometimes it hunts for gears. The higher the number the faster the shift. It also had a launch control sequence where you could hold the lever, floor it, car wouldn't move, release and it would go slipping the clutch. Overall it is very cool and I would get again.
If you are getting a manual, you can disregard everything above. Yes, there is a rasp at a certain RPM. I didn't find it annoying and considered it apart of the driving experience. I do recall an exhaust mod that eliminated the rasp as well.
Yes, there was a bearing issue. When I bought my car, BMW had pinpointed to models built 11/01. However since then, I thought most if not all 01-03/04 were recalled with a bearing fix. All of these cars come with the 6 year/100K warranty. Don't quote on the above but I am pretty confident. It has been 3 years since I owned it. I have kids which required a different car.
Back in 02/03 there were not a lot you can do to make it faster. Exhaust was about it. I have seen superchargers/intakes and chips but not sure about reliability and how much power you really pick up.
I ran it at the track once at near freezing temperatures so no traction and ran a 13.7, don't recall MPH(I think 103). I tracked the car a bunch of times. Only problem was warped rotors which were fixed under warranty.
Not sure whatelse I can answer, PM me and we can talk on the phone if you would like.
Good luck,
Jay