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The incredibly neutral setup of the E46 chassis is complimented by a square setup. Many E46 M3 track junkies swear by it. For our cars, however, I have first hand experience with the square and slightly staggered setup and MUCH preferred the staggered setup. The ease at which our shortened wheelbase car rotates makes having a bit more rubber in the rear advantageous. I run a 255/35/18 and 275/35/18 setup, so we're not talking about a major difference in sizes, and I love it. I ran 265's on all corners for two track days and didn't like it one bit. That said, when I ran a square 255 setup on my E46 330Ci, I couldn't have been happier.
OP. The answer to your question, as many have noted, is yes. Offset does affect handling. That said, you're never going to feel it on the street and would probably have a hard time feeling on the track. All of the various rubber bushings and stock performance parts, designed with comfort for the typical driver in mind, are going to be the limiting factors that impact handling way before offset does. But everyone loves a properly offset wheel... looks much better.
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