I'll throw my two cents in here since I've kind of been thinking of doing the same thing as you are. I've concluded that the M54 engine will be fine with boost provided you don't become addicted to it and overdo it and also provided that your tune is good (never lean). The N54 has basically the same bottom end, 10.2:1 cr and runs 8 psi of boost for ~300 chp from the factory. An M54 with 8 psi of boost properly tuned will do just fine under the rigors of towing.

A small-ish turbo or positive displacement supercharger will be a better match for a heavy SUV like the E53 compared to a centrifugal blower like others have already mentioned. The centrifugal blower won't 'feel stronger everywhere' but will rather come on stronger and stronger as RPM's build with little difference being felt coming off a stop and at lower RPM's. Not really ideal for towing.

Upgrading the cooling and drivetrain is not a necessity, but making sure it they are in tip top shape is. IIRC, the auto 3.0 is rated to 5 or 5.5k lbs while the manual is 6k. Keep your loads within those limits, and don't do extended full throttle pulls at max load, and you'll be fine.

However, if your trans is already heating, it's already slipping, and adding power will make its failure that much quicker. The E53 GM trans is electronically controlled and has a series of clutches and solenoids to actuate gear changes. Once a gear is locked, there should be no slippage, and the heat generated should be minimal (i.e. towing or not, your ATF should roughly maintain engine coolant temps since it is cooled & heated by the engine radiator). If it's heating, it means that you trans is slipping excessively during gear changes, which can be more frequent with towing.

I've also decided that if I go the V8 route, it won't be in a BMW but something domestic with a more robust drive train like a Trailblazer SS or Jeep Grand Cherokee SRT or the like. A little less refined than the bimmer, but they sure can take a beating in the drivetrain dept.

Keep us posted on what you decide to do!

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2012 xDrive35d
2001 BMW X5 3.0i 5MT
and two 1987 Corvettes - Callaway Twin Turbo and Guldstrand Grand Sport 80
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