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CA? Do you mean emissions?
I don't know how it IS in CA, but I understood that as long as the engine/ECU is from a newer vehicle (ie:in your case 2001+), the swap is acceptable. For tail pipe test, just install OEM CATs (C5 uses 4 small CATs) and a milder (not stock) cam.
I'm lucky that here in AZ it's just an OBD2 test only. I plan to use EFILive to flash the BMW vin into the GM ECU so the vins match on a scan test.
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