I'm in the middle of an audio refresh for my car too. The HK system bites, it's got absolutely no low end or high end, it's all sort of a muddy in the middle sound. It's taken me some time to wade through all the various E46 audio forums, audio installation forums, audio equipment sites, and talking with a few good installers, to figure things out, but there are alternative and better solutions available rather than the Bavsound route for about the same amount of money.
I am by no means any sort of audiophile, but after listening the HK setup for a while, the majority of the sound seems to be produced by the two 6.5" woofers located in the bottom of the front doors. The two 5.25" midrange speakers located in the rear passenger provide the next layer of fill, with the remaining fill coming from the two front midrange speakers and four tweeters located front and rear. With this in mind, and based on what others have done who know a lot more about this stuff than I do, the best and most logical solution seems to be replacing the two front door woofers and rear subwoofer with quality after market speakers being driven by a quality after market 5 channel amp. The OEM HK amp is retained and used to drive the smaller midrange speakers and tweeters. It makes for a lot of splicing and dicing, but in the end is what appears to be a viable and affordable solution.
Based on what I could dig up, the OEM HK amp is a true 10 channel amp sending separate signals to each of the 10 speakers in the car. The HK amp delivers a separate and actively crossed-over signal to each of the ten speakers. There are no passive crossovers anywhere. The concept and engineering behind the HK system is really amazing, but somehow it falls short of creating what should have been an incredible listening experience. I blame this on the BMW engineers who are constantly looking for ways to reduce weight while maximizing interior space and comfort, the speakers used in this system are all extremely light weight and are shoved into very shallow and tiny spaces which don't allow enough depth to accommodate an efficient speaker. Consequently, when most E46 owners choose to upgrade their HK system, they usually become frustrated when they discover the lack of quality after market speakers that will fit in these little nooks. This is where Bavsound (BSW) comes in. BSW discovered this niche and they've done some excellent marketing and in doing so, has created somewhat of a monopoly when it comes to down to your options for an audio "upgrade". IMO, the Bavsound route is really more of a compromise than a solution.
For the two front door woofers, I got a great deal on a pair of 5.25 Focal K2 Power 130KRC from Crutchfield for $399.00, which usually retail for around $750.
I went with a 5.25" speaker, because I couldn't find a quality OEM sized 6.5" speaker that would fit. The Focal's from Crutchfield come with a pair of free adapter plates which allow the proper fit.
https://www.crutchfield.com/p_091130...RC.html?tp=105
I didn't want to do a bunch of work in the rear ski pass area trying to custom install a sub, so I opted for an enclosed sub made by Pioneer for $111.00 from BestBuy. It's perfectly sized and will attach directly to the trunk side of the rear passenger seat wall. All you have to do is remove the existing OEM sub and plastic door, then attach it with the brackets supplied by Pioneer, or make your own brackets out of 1" aluminum angle from Home Depot, which is what I'm going to do. I'm doing this because the brackets supplied by Pioneer are a little flimsy and I'm worried about the sub rattling around. I'm also going to use some 1" adhesive backed rubber foam to isolate the brackets from the rear seat wall.
http://www.bestbuy.com/site/pioneer-...?skuId=5588607
I'm not sure about the 5 channel amp yet, but have two in mind:
1. https://www.crutchfield.com/p_530PN5....html?tp=35808
2. https://www.crutchfield.com/p_500PDR....html?tp=35808
The Soundstream amp is affordable and seems adequate, but the Alpine would be my first choice if it wasn't for the price tag, so I'm still looking.
You'll also need a 5 channel line out converter. I couldn't find a 5 channel, only a 6. Anyway, they're easy to find and run between 100 to 150 bucks for a decent one.