I had an '01 3.0 non sport non self leveling that I towed my e36 M3 race car on an open steel dual axle trailer many, many times and although the rear end of the X5 would drop considerably it always towed just fine.
I will say that my 4.6 tows a heck of a lot better than the 3.0 did, due in part I figure to the sport suspension and much larger tires and wheels. Not that the 3.0 was bad, but the 4.6 feels much more stable. Hardly even know there's a trailer back there sometimes!