The bad noise I've been hearing is in fact a worn flywheel. Being replaced with E28 unit and new clutch, as planned. Tranny checked out with a clean bill of health, praise the Lord. I'm also having a new UUC Height-Adjustable Street-EVO short shifter with the upgraded bushings installed.
Total cost is estimated at $1000-$1500. I'll get it back next week sometime. I'm driving an '84 318 with almost 200k miles on it in the mean time. Words cannot describe it, and if there were any that could, I probably shouldn't say them here anyway. Example of the torture - if you think your E34 has an annoying rocking seat, sit in this car...My shoulders actually touch the window on most corners...I'm going to Home Depot and buying the biggest hammer I can find later tonight...