I did replace my thermostat and waterpump on my 330xi. It has less room to work on then in the OP's pics, but it's possible (if you got skinny fingers, lol).
For 330xi, and probably 325xi and 328xi:
Remove air intake to gain access to radiator fan,
Remove the radiator fan (only 2 screws one on top, and one underneath)
Unhook the sway bar (just like OP did)
Now there is just enough room to replace the thermostat and water pump.
Use u-joints or flex drives to get to the bolts.
DO NOT buy used water pump, my broken water pump looked fine and it was not completely dead. It's not worth it to find out that the part you struggled to put in is not any better then the one you took out.
Last edited by rusty_g80; 06-29-2011 at 10:52 PM.