It's my feeling that the M3 and 1M deserve each others' motors.
The 1M has a short wheel base, is light (relative to M3), and has huge torque and turbo lag (minimal - but it exists). This makes for an exciting driver, that is great at stop light jumps, and sideways shananigans - and tons fun on track. However, as Randy Pobst (ducking now) will tell you it makes for a tricky car to drive consistently quickly.
The M3 deserves the torque advantage to aid in low gear acceleration to overcome its extra pork.
The 1M deserves the progressive power delivery and biased towards high revs. This would make it easier to drive the 1M smoothly. The short wheelbase can be pretty easily upset on corner exit w/ the n54, but shift the power up in the band, and give the driver razor sharp throttle control - and the 1M would be fun, fast AND controllable.
I personally would LOVE and s65 in my 1M.