Hell has a special place reserved for the Stealers. First, I love the little pressure tactic of telling you the buyout price will go up if you wait. I would bet the opposite is true: the last thing they want is to be stuck with used V8 SUVs that very few are buying right now.
Second, you are absolutely right to reject the CPO mark-up. You are the original owner, you know the exact condition of the car and its history. You're better off going with an after-market warranty.

Personally I would stand my ground. If the dealer won't meet your price point on the buyout, shove the used X5 up his a$$, and use your buyout money to lease a nice new E70 4.8. ... IMHO of course....