It's all subjective...take into consideration that the E36 M3 is lighter and the E46 M3 is more powerful...now add into the equation the various combinations of springs, shocks, sway bars, bushings, tires, brakes, driving styles and preferences...what you have is two of the best handling cars in the world competing against one another and can always one-up each other. Personally, I'd take the more powerful car if everthing else (including cost) was equal. I wouldn't trade my '97 M3 because it can't be replaced or equaled for the cost...and I can always tweak the suspension to make it comparable or better to a stock E46 M3 (except for HP)...and it's a 4-door which is important to me (and my grandkids).
This thread is like a family squabble... but when push comes to shove, all M3's are superior to any factory sedan in the world.