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I've been consider the same thing and it's probably not worth a full engine swap considering coding it to an OEM quality would be a nightmare. It would be more beneficial to do what BMW did for the M2 and move over parts from the S55 to the N55 that make sense; such as the Pistons, etc. etc. but at that point you may as well go with a stroker kit for the N55 from Vac Motorsports and a bigger Turbo.
Plus you're better off keeping the 135iS stock since it was a limited run build, and a little more rare than the 1M.
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