A little late BUT BMW does offer exchange engines (they are new, you need to return the old core engine) and has done so since the 1950's (this existed even for the vintage 501, 502, 503, etc.).

Go to realoem and put in your VIN (last 7 digits). Look in group 11 (engine), you'll see the short engine. List is $19 K but a BMW dealer buys this at SIGNIFICANTLY less (about 50 to 60%). You'd need some new gaskets, etc. but this would net you the same car you have with a NEW, zero hour engine. Probably 10 to 15 hours of labor (which the dealer would have to absorb anyway as it's their error).