I've been really happy with the overall towing performance of the 35d. Smooth, stable, a little hunting for gears, yes. Never thought to try towing in Sport mode, as a few guys in an Airstream forum have recommended.
The trailer is about 5200 lbs loaded. The pricey Hensley-Arrow hitch (earlier Pro Pride design) adds 90 lbs of tongue weight, but I've appreciated the "no-sway" design with two different medium-sized SUVs towing medium-sized trailers. The X5's towing MPG averages 17, which easily beats the 12 MPG I got with a 4.6L gas V8 Ford.
Have close to 10,000 towing miles on the 35d, (112k miles total) in both plains and mountains driving. The transmission slips a bit when cold, and I still worry it will be the weak link, even if we make it to 150k miles.