I've been following the developments on this car quite closely.
Here's a breakdown more or less of what to expect:
* Upgraded version of the 135i's twin-turbo N54 motor.
* 350Hp, 420Nm (approx.)
* M3 Brakes
* M3 Seats
* Tweaked version of M3's LSD
* Lighter than the 135i
* Better suspension which will make it more fun to drive and more stable at higher speeds.
* And of course the swollen wheel arches to house some 19's
The chief developer of this car says they are building a car which will make M more affordable and available to the masses.
It will be shown for the 1st time at the Detroit motor show, and will go on sale in Europe in Spring 2011.
There's a couple of demo vids on Youtube now, released last week. Just search for 1er M Coupe, and you'll find them. The test car is black with lots of that camoflauging tape on the front, back and sides. But you can see more or less how it will look.