After doing some measurements and making a few calls, turns out cutting my driveshaft won't be an option. I need it shortened by at least 10mm, which is almost nothing. I found a Z3 driveshaft which is identical in every way, but 6" too short. Could not find any other BMW driveshaft that would work based on research.
Called up DSS and got a quote for a custom one-piece drive shaft (roughly $1k). Had a choice: Pay $1k, be done with it, or cut the subframe, move the motor up ~15mm, and use my current drive shaft for $0. I chose to cut the subframe. Mostly because I need to weed out issues and get this driving before spending the big $. Going for low-budget right now.
My favorite tools
Before:
The oil pan current has about 3mm clearance to the crossmember front and above.
Cut:
Adjusted motor/trans mounts to move engine 13mm forward, still have clearance under subframe and can now mount stock driveshaft with ease! Waiting for some 304 SS sheet to weld up the subframe holes.