it'll be petrol engines that they are talking about. bmw already have turbo diesels all over the place in europe.
i think the reason they aren't going for massive power is because the m3 will be 400hp or there abouts. there is no point in making a "standard" car more powerful than the m3. its just stupid. 330hp from a stock tt3.0 is still pretty damn good though. there aren't too many twin turbo motors that make that straight from the factory and the ones that do are considered "high performance" such as the rb26dett of the gtr skylines and the twin turbo supra engines. they don't make 330hp stock.
the power and boost will be low to aid reliability as well. if you start tuning the car too much its going to have a rediculous manitenance schedule and nobody will buy the car baecuase it'll be an expensive pain in the ass to maintain.
while 330hp might be a bit down for a performance car that we youger people go for, its more than adequate for the people that will be actually buying the cars. the ones that want more power will either do the mods themselves or just buy an m3.