I couldn't find anything specific to E53, but pages from the E70 WDS that I found seems to say that the TCM does a couple of important things.
- It both connects and isolates the trailer electrically, so a fault/short doesn't propagate from the trailer into the vehicle.
- Deactivates reverse light, rear fog light, PDC
- Sends and stores Check Control messages when trailer faults are detected.
Also has circuit breakers/overload prevention and detection.
The WDS doesn't say directly, but I would guess that the TCM also somehow announces ACHTUNG!! TRAILER_MODE_ACTIVATE on the CAN so that at least 42 other control modules ranging in function from transmission management to steering wheel heaters can now do 'The Right Thing' for towing.
Seems like once the TCM brings power back to the connector, the rest of the wiring is pretty straightforward. If 61130412965 connects directly to the vehicle then I'm a happy guy.. that's only about $40. Add a decent eBay TCM and it's boat shopping time.
As for the hardware,well, I'll live with an aftermarket receiver for now. Hell, I towed well over 1000 lbs pretty regularly with my little MK4 GTI VR6 for years and that receiver fastened primarily to the sheet metal on the passenger side of the luggage compartment and spare tire well. Not the most elegant design, but it worked. She towed up to and past the rated max effortlessly and at surprisingly high speed.
I can't believe that the X5 is going to be anything less than leaps and bounds better, even with a "2nd best" receiver. I think it'll easily handle all that my 5x7 landscaping trailer can throw at it.