I was thinking more about using the crank from a 3.3L (the car, not the motor) in the M90, as it had a stroke of 88.4mm compared to the M90's original stroke of 84mm. It is true custom pistons would be required, but if he plans to upgrade the CR anyway, then pistons aren't such a bad idea.
Oh, and with any diff swap, don't forget that the spedo will have to be redone to account for the new ratio. The spedo gets the signal from the trans, rather than the diff like newer BMWs, thusly the spedo does the calculations to account for the final drive. I found a place or two in the southeast that would do this for about 300$. As was said earlier, the CS uses a side-loader, more specifically the big side-loader (The 2002 and the E21 used the small side loader) which was also used in the E12 and early E24's based on the E12 chassis. Unfortunately, this means they are rather tricky to find, at least in LSD form, especially in the ratio that requires no spedo change. (3.45) Supposedly, one can replace the entire rear subframe and suports with those from an E28, allowing the coupe to use the newer style (and more abundant) diffs, but I haven't tried it, and hence, cannot confim it.
Right now, I have the 265 with the stock 11:38 (3.45) rear end, along with the motor / Motronic combo I have in my sig. One can patch out in 1st pretty easily, 2nd is pretty difficult, but the car takes off suprisingly quickly in 3rd. If you hold 3rd from about 2-4k, you'll do 70 in about 5-6 seconds. The chassis is so sorted that you don't realize you are going that fast until you check the spedo. When I was merging onto I-75 on the way to the body shop, my dad'd Mini Cooper S (with all the Cooper Works stuff, so it's about 200hp) had a bit of trouble keeping up.