I probably was one of the 1st to fit the K&N into an E46 M3 in the country and it made a good noise, Yes. But performance, no not really. We did plenty dyno's and the OEM system performed to within 3% of the K&N intake. Infact on some runs the K&N lost torque lower down in the rev range. You need to remember that the OEM system uses HP/LP type setup and the ///M engineers didnt waste millions by just slapping something on without doing research.
I think its the placebo effect you guys are feeling