OK - here are my options.
1. stick with the 18" X3 wheel and use either a 255-55-18 Blizzak LM-25 4x4 or Falken HS439 performance snow tire
2. go with an aftermarket ADR 19x8.5" wheel with the Falken HS439 or Pirelli Scorpion Ice and Snow
Overall cost adder to go to the 19" size is $250, which buys me better looks and piece of mind on the clearance issue.
I'm leaning towards the 19" at this point.
Here is Falken tire I am looking at:
Tires - Eurowinter HS439 - Falken Tire
Or the Pirelli, which is a more proven choice:
Pirelli Scorpion Ice & Snow