I'm from Canada, and not 100% sure it will also applies to US. But since there is more BMW 3 series in US, they should have better service and idea of subframe ripping out.
to mod: please do not move this thread to regional forums. this thread is to give fellow fanatics idea of how to get BMW to cover 100% of repair cost.
Here is step by step chronological procedure of what I did.
Currently, my car is 99 323i with 140000km, warranty is long gone. It has H&R Touring cupkit suspension but BMW never cared about it at all.
March 6, 2007 Tuesday
Took it to Edmonton BMW(local dealer) to check clunking noise coming from rear. This is what they wrote as cause. "Fault found rear subframe mount crack."
March 7, 2007 Wednesday
Took it to local bodyshop and got an estimate. With the estimate, I called BMW Canada regarding the issue, but they didn't know anything about subframe craking and insist Service Manage at dealer to call.
March 8, 2007 Thursday
Went to Edmonton BMW, and met Service Manager. Before trip, I printed out the service bulletin number and bodyshop quote.
Service Code: 41119101
Description: E46 Cracking in rear axle support
Service Code: 41009385
Description: E46 Inspection of rear axle carrier (on customer request)
TIS article # 41 03 03 025 - Fractures on rear-axle support E46
During the meet, I raise the concern about safety and fact that no bodyshop will give warranty because it's structure design problem from factory. DO NOT SCREAM. CONTROL YOUR TEMPER. Service Manager seems like he understood my concerns and told me that he will give a call BMW Canada by next week Tuesday and try to get something for me.
March 12, 2007 Monday
Just little heads up call to Service Manager, and he told me, there is personal from BMW Canada coming on Wednesday, so he will have answer by then. Also, I didn't have to bring my car in.
March 14, 2007 Wednesday
Called Service Manager and he told me BMW Canada will cover 100% of repair cost. They didn't offer me loaner up front, I had to ask for it. This is pretty much what I said. "I know I shouldn't push this, but it will be really superb if I can get loaner during repair." Serivce Manager told me he will get me one.
My car is booked on March 28, 2007 for repair and my god.... it's so much relief now.

I really wish everybody who has or will have subframe ripping out, be covered by BMW 100%.
Simon