The engine in your 7's was an M30, considered the big 6, your 328i has the M50 (actually M52tuB28), which is the second generation of the little six. The M30 is a heavy and large lump, about 85lbs and 3 inches longer than the TR unit. An M20 or M50 series engine is nearly identical in size and 70 to 130 pounds lighter depending on the version you can find. Z3's and late 528 and 530's had an iron sleeved aluminum block, all others were iron blocks, alloy heads. I chose an M20B25 for two reasons. I get them for free from cars I part out, and since everything is metal (valve covers and intake) it can be disguised to look correct to the casual observer. Picture the BL emblem on the intake and a Triumph rear valance badge in the middle of the valve cover. As for the differential, the stock unit is a noisy and heavy, the BMW unit is free, the correct ratio, light, quiet, limited slip and easy to install.
Also, I'll be doing this next winter during the body-off. When I'm done, I'll be happy to give rides and throw the keys to someone else. I have converted many people to BMW by letting them drive the M3, cars are to be enjoyed. I live minutes from "The Dragon" (hwy 129), Cades Cove, Foothills Parkway and Gatlinburg, and I'll shoot the breeze for hours with anyone out this way!