I'm in the camp that would have favoured emphasis on iS or M-Sport. M is revered; if that letter is on the badge then the car should be a true M-car. If they want a performance line, they should use the iS branding, and market it as having been finessed by the M division. That's enough to satisfy people in the know, while offering something with a little more edge to the buying public.
BMW did the right thing when they chose to leave the M1 badge off of the 1-series M Coupe. They need to apply the same sense to the M brand as a whole.
There's nothing to stop them from pushing M into hardcore territory - just offer a new trim to fill the void.
In my garage: '11 e92 335is 6MT (05/10) SpGrey/CoralRed/GlacSlvr ExecPkg/NavPkg/19" 225M
Retired: '07 e92 335i 6MT (12/06) SpklgGrpht/CoralRed/GreyPoplar
Retired: '04 330Ci M-Sport 6MT SilverGrey/NaturalTan/MyrtleWood
Retired: '00 328Ci 5MT SteelGrey/Grey/MyrtleWood
Retired: '87 Pontiac Grand-Am 3AT White/Grey