You give far too much credit to the M3. The M3 is only fractionally faster in the straights due to the low torque (295 versus 325 lbs feet for the S5) and through the twisties -- who knows yet. Top Gear was able to beat the old M3 on the track with the B6 S4. It's more about driver skill and knowing the differences between the car's dynamics.I don't really understand what it is, that you are trying to convey. If you are referring to the RS5. Yes, it will be a threat to the M3; but a different kind of threat. The S5 won't do any harm to the M.
I would condiser the M a tad heavy, so the RS5 will be a pig; albiet a very fast one, but not very agile.
All cool cars, though.
But even if the M3 gets to 60 in .1 or .2 seconds faster and is a fraction faster in the quarter mile.. who cares? It looks hideous and every douchebag with 60K who wants some kind of bragging rights will buy one. Who wants to be a member of that club?