And a writeup: - The E28 Lounge

I recently installed a ported, decked 325i head and 274 cam. Any other cam is a waste of time. Anyway:

Building the 2.7i

Heads, Pistons and Blocks
All 2.5 and 2.7 blocks are the basically the same. The e34 m20 has the dipstick in the oil pan, so the block has no provisions for it. But, as far as critical dimensions and specifications, they're all the same. 2.0 and 2.3 blocks have smaller bores, and do have room to be bored to as much as 2.8 liters with the 81mm crank. They lack the so called "steam holes" between the cylinders, which arent really necessary. Having brand new, fresh bores is a bigger benefit. For heads, its either the 731 or an 885. The 731 is rare in the states, but will work with dished eta pistons for a CR of 9 to 1. It also has considerably larger intake ports than the eta head, and can flow enough air for about 200 horsepower with the right cam. The only drawback is that it shares the same size valves with the eta head, the 40/34 set. The 885 is the best stock m20 head, with 42/36mm valves, even larger intake ports and a superior combustion chamber design, it is the most efficient and makes the best power. The problem is that it has larger combustion chambers, 43ccs vs 38ccs for the eta and 731 heads. You need either matching pistons from an i or 88 eta or lots shaved from the head. The only other real important detail would be connecting rods. e rods are 130mm, i rods are 135mm.
Anyway, what works is as follows:
1. 84mm Block, e Pistons, e Rods, e30 323i 731 head 9:1 CR
2. 84mm Block, i Pistons, i Rods, 885 head ***must shave 3mm from pistons***
3. 84mm Block, i Pistons, e Rods, 885 head ***must shave 2mm from block, adjust cam timing***
4. 84mm Block, 88 e Pistons, e rods, 885 head direct fit high 8's CR
5. 84mm Block, flat top euro e Pistons, e Rods, 885 head direct fit, high 9's CR
6. 84mm Block, e pistons, e Rods, 885 head ***must shave .040 from head***
I'm not sure about #2, as I havent actually done it, and it might cut too close to the top ring on the piston. Its probably not a concern with the dome, and it'll likely end up with a surprisingly high CR, but you would also have to re-cut the valve reliefs. Any respectable machine shop should be able to take care of it. #6 is a controversial option, and its also whats in my personal car. Its close between the valves and pistons, but it'll work with stock e pistons. If you cut deeper valve reliefs, you can worry less about high rpm valve float and take more off the head. The more off the head, the more off your timing is going to be, and the farther your valves are gonna poke into the CC. Keep that in mind. I got away with .040 with a negligible effect on timing. Anthing more will require an offset cam pin or adjustable pulley. The other options are easy enough.
Cams:
At least a motronic specific 274 degree grind. Stock i cams suck. Even the mighty 323i cam, the 264. Dont bother. No comprimises. If you do have one it's a better core to regrind because they'll have to remove less from the base circle to get more lift and duration. Still, be careful not to go too big on the cam. Supposedly the motronic ICV has a hard time controlling the idle on a motor with anything more than a 274 degree cam. Others say some larger cams designed for carbureted motor can make even less power than stock. Just make sure your particular grind has motronic in mind.
Intake:
325i all the way from intake manifold gaskets to the lower airbox. Extrude honing is unnecessary really as its more the manifolds design than anything else that hold the top end back. With a cam and head porting it'll pay off, but its still a considerable price to pay for the boost. If it was more affordable it'd be a little different. If you want more, adapt a set of individual throttle bodies.
Fuel Injection:
Anything but the stock eta FI, the basic motronic system. It'll never make power. 323i FI, K jetronic I think, works, 320i/325i FI, motronic 1.1/1.3 adaptive is ideal. Buy a copy of the ETM from ebay, as it'll come in handy when wiring in a different harness into your chassis.
One thing many people end up going crazy with are fuel injectors. There isnt a normally aspirated 2.8i out there that needs more fuel than basic 535i injectors can deliver. Forget about it, theres nothing to it. The only things larger injectors do are throw off you OBC, make it harder for the ECU to adapt and cause more variation in the actual fuel delivery between the cylinders.
Exhaust:
i manifolds are minimal, shorty headers are a little better, all out equal length headers are best, but still only give a minimal boost. From there back you're on your own. If youre building an e30, use an i system, e28's can use the 533i system.