It's the Transmission
 

Just got back from a road test with my dealer's head mechanic. He felt the promenent 2 to 1 down shift along with the power hesitation at higher speeds. I'm scheduled for the SIB 24-08-07 update next Wed. X3 is only three days old so this better do the trick. FYI, my dealer is Difeo in Tenafly NJ and my X3 build date was 3/07. Let you all know how it goes next week.

I'm scheduled for next monday for the SIB. Of course, they had no idea what I was talking about. Our X3's build date was also 3/07.

I noticed the exact same jarring "drop" from the tranny when I test drove an 07 X3 last week. I also noticed a hesitation in the engine/transmission when pulling away from a stop sign. The salesman said it felt like it needed to be "programmed". We'll see; we purchased our X3 which delivers next week. Fingers crossed that they'll continue to tweak the tranny software. My last BMW, a 2001 330 ci was one of the early E46 off the line. The Auto press and owners alike initially complained that the steering had been "over-boosted" and the car lacked some of the typical BMW "road feel". After several months, BMWNA offered to change out the steering rack to the original, less power-assisted feel. This was only available to owners who requested it. I was impressed and relieved that BMW offered to cover this "performance" repair under warranty. I've read several posts that indicate anomalies to the 07 X3 transmission, and assume that with enough complaints & feedback from customers, they're work out this glitch in a similar manner.

I'm another one that owned a MY 2001 330ci and had the steering,( road feel), problem and had the Steering Retrofit done. IMO the change was so minute it wasn't worth the time that the dealer had the car to do the work. Thats one of the main reason I got AS on my 530i and servotronic on the X3 to get better road feel at higher speeds and I'm very well satisfied.
cheers
vern