When I bought my now ex e46 325i I was quite disappointed (coming from an e36 328i). I found it was quite sterile below 4000 r/min, and only really started hauling in the last 1000 r/min. I also listened to people say that the e46 325i is more or less the same as an e36 328i, only to find that the 325i was quite abit ''muted''. I dont like revving the nuts off a motor to maintain rapid forward motion. When im trying to extract maximum performance, yes, otherwise I enjoy a car that feels strong all through the rev range as well as at high rpm. I dont think that the e46 325i is a bad motor at all, just that its peaky nature combined with a heavy body dumbs it down alot. Theres no denying that a 325i sounds magnificent at high RPM though.
I became so frustrated with the e46 325i power delivery, that I have since gone back to an e36 328i and have not looked back. Just enjoying that creamy solid torque all day every day. Changing gears between 2500 - 3000 r/min will see me keeping well ahead of traffic, even up inclines. Althogh my car does have a couple of mods...
I recently drove a 1993 e36 325i non vanos, and that felt more lively than my e46 325i. Maybe its the vanos seals as moranor said, but I still prefer the feel of the bigger motors in the respective ranges.... They always seem to have that little bit extra...