Sorry for the OT, but was it ever confirmed what the shortblock from BMW consisted of? It was in the $3700 range, and one of the vendors was claiming it is in fact an entire block/crank/rods/pistons/all bearings, etc. If that is in fact true, it wouldn't be a whole lot more $$ to get a completely fresh engine (probably do a little head refurbishing too).
OP-Did you try to see what BMW wanted for all new parts, or did you know you were going to do the machining and everything anyways. I suppose if you get the machining done for free, it's not a big financial hit.