Actually what was stated was that BMW could have added more power but there were problems with over heating and the downpipes failing. Of course these issues have been remedied somewhat and the Xede, Procede modded cars are doing well.
We all admit the 335i is a great car. If you want to mod it and make just as fast as an M3 then go for it.
But, I am not going to be envious when I am sitting in my M3 and you blow my doors off. That is not why I am buying the M3 over the 335i.