It was a rather popular thing to do with 318s especially for the guys who went to drivers schools. They generally had a lot more money then they needed and found something to do with it...from the 323 models on up people have been able to swap in M3 engines
I'm not sure how different the 318 and the 320's are though.
One of the Mid-Ohio HPDEs I went to, had like 3 - 318 ti's with M3 engines.