I think someone has already done an E39 V8 swap (Hartge maybe?). So, it is possible and information is out there on google if you want to attempt it. I wouldn't go with the (aluminum block) N54 because of the cooling and HPFP problems.
I think the 5.0 V8 from the E39 M5 would be the coolest route, but I think it will cost you a lot more than the ESS supercharger. Even if you were able to pull it off for the same initial cost (and that's a big IF), the maintenance would be killer. Expect many hours spent trying to reverse engineer a car that would be tough- if not impossible- to resell, and a whole lot of down time for your Z. You'll have to find a buyer that is able to do most of his own work with a good understanding of BMWs. If you went with ESS, you could part out the kit when you sell and only be out a few thousand dollars.
I'm not trying to crush any dreams here, but everyone is excited and optimistic on the first day. When you're the hole 8 or 10 grand on a car that's in pieces and no tech support to help you overcome an unexpected problem after 6 months of labor... that's the day you'll have to prepare yourself for. To see what it cost to turn a 323i into an M3, check out
http://e46.mit.edu/
My advice is to go with ESS.