Thanks guys, but I try not to use my car to justify my statements. I believe that people's comments should be
respected, or asked to be expanded on if there is some misunderstanding or doubt.
There is about 10mm more rear wheel clearance on an E46 coupe versus E46 sedan, and quite a bit more yet between the E46 M3 and E46 coupe. The practical limit seems to be as follows:
E46 Sedan - 255s
E46 Coupe - 265s
E46 M3 - 285s
To fit Toyo RA-1 275/35/18 tires, I tried a number of things before having serious fender work done. First, I had the undercoating removed and the fender lips rolled as much as my local body shop would dare. It wasn't enough, so I decided to do some fender rolling myself with a baseball bat. Basically, I jacked up the rear of the car and inserted a baseball bat between the fender and the tire, then lowered the car back down. Moving the car back and forth caused the baseball bat to roll across the fender lip, but it did very very little. So I decided to cut the inside of the fender lip off to make it easier to "roll".
Out came a 3" cut off wheel, and I started to cut through the bottom of the fender lip. With a clean cut across the bottom, I then discovered that there is actually no fender lip as you find on other vehicles. On the E46, the fender lip is where the inner and outer sheetmetal join. I had basically cut apart the fenderwell sheet metal from the exterior sheetmetal of the car. The result was a hole into the interior of the car.
I then proceeded to shape the contour of the fender lip (Via the baseball bat method) to achieve the best tire clearance. What I found, was that the inner fender well sheetmetal was the real "problem". It didn't seem to matter how much the outer fender was pushed out, it was the inner fender work that caused most of the rubbing. The real tire destroyer though, was a bolt used to attach the rear bumper cover support to the chassis. I had to basically grind this attachement point completely off. Then I found that the tire was rubbing against the bumper and pastic mudgard when cornering. My tire height was 26", stock is 25.4", so very little change.
Being that the car at that point was basically a weekend toy, I lived with the open rear fender wells until the fall of 2006 when I took it off the road. I then looked at every area of the car that I wanted to improve with a "blank sheet" approach; the rear fender wells were fairly high up on this list. I had the inner sheetmetal replaced to allow greater suspension travel without clearance issues, and the fender wells completely sealed. Ironically, I never had the outer sheetmetal fender lip touched at all. In the image below, you can see the result:
After cleaning and priming the chassis:
Wheel clearance check with no springs installed and the suspension completely bottomed out:
I don't believe it's possible to get this done properly for $20. It cost more than that in paint alone.