The SMG is a great tranny. My M3 is a 6 spd, but I drove a few SMG's and liked them... I just wanted to row my own gears is what it amounted to.
Go drive a few yourself... and give it a good hour long workout - its like learning how to drive all over again... not at simple as simply flicking paddles, though it may seem.
As for horror stories - I see more complaining about popped S54's (M3 engine) than I do about SMG failures... I think theyre safe enough and the factory will replace just about anything that breaks anyway.
As for M3 vs. 330... Ive owned both... they might as well be made by different companies. Spring for the M - even its its used (like mine). Its easily TWICE the car in all aspects.
02 or 03 SMG M3 should set you back between $38K-$45K depending on milage, condition, warranty status (4yr 50K or 6yr 100K) and options.
The E46 chassis as a whole, however is almost unfair. I have yet to track it but even exploring a tad on the street (within reason) its easy to see how this car can get you into trouble if youre not paying attention. Its EASY to drive VERY quickly and VERY close to the limit. Forgiving, fast and loaded with all sorts of drivers aids.... as opposed to your Miata, which takes alot of attention and input to drive quickly - by comparison.
