Dude, seriously don't get a Z3 M, I can think of so many bimmers that are far cooler. One of which is the car you own right now. I would definitely keep the E9 over that car, any day of the week.
While I certainly agree with you that the E9 is much more beautiful and is much cooler, it is also decidedly less reliable, and has higher operating costs. I need a car I can DD, not just a machine I can drive on nice days when the chance of any sort of rain is zero.
I like the Z3 Mcoupe because it is different, uncommon, and has a marginal degree of utility with the large boot. Given it also uses a majority of E30/E36 parts, the operating costs are lower. I would keep it stock until I get out of grad school, then there is a significant aftermarket. It would be plenty fast in stock form, however.