Another alternative would have been to fit E46 328 front brake discs and caliper carriers (retaining your current calipers etc etc).

This gives you 300mm discs, which should fit under 16" wheels (320mm needs 17").

Excluding the cost of the discs and pads, ther carriers can normally be picked up from a breakers for 20-30 notes.

Here's the guide:

http://www.bimmerforums.co.uk/forum/...-300mm-t36936/