I bought a '97 328 when it was about that age and 175k miles. It is now 13 years old with 255k miles on it and it looks and runs great. My daughter has it at college and it is the envy of many of her peers who have much newer cars.
That being said, if you buy a BMW that old, you had better be prepared to buy a few parts on line and spend at least a half-day a month turning a wrench. I have my other daughter's 328 (160k miles) in the garage right now waiting for some more parts. I just had its secondary air pump rebuilt ($125) and I still need to replace the check valve between the exhaust manifold and that pump (another $125). It also needs a new thermostat housing ($20) because the original plastic housing has warped and never sealed properly after I replaced the water pump and thermostat last year.
The 255k mile 328 got a new PVC valve and hose, new power steering hoses, and a new valve body rubber boot as she passed through on her way to Portland for her summer job. When she passed back through on her way back to college this fall, it got a new cam position sensor, a new VANOS oil line, a new radiator, new coolant reservoir, and all new coolant hoses.
None of this stuff is difficult, and it is not terribly expensive if you buy the parts on line and put them on yourself, but if you are planning on paying someone else to do all the wrenching, brace yourself and find a good BMW specialty shop.
Of course, I am talking about work I do to my e36s, and you are buying an e46, but I would expect that as the miles roll up, repairs will be similar. My e46s have less than 100k miles on them and have been quite trouble-free so far other than windows and sunroofs.