the thoughts continue...
"When it comes to going fast, many concentrate on producing more power at the engine. Unfortunately, any experienced racer can tell you it is not the power at the crankshaft which propels the vehicle. In actuality, it is the percentage of this crankshaft power which makes it to the ground that is the true measure of performance
The Physics: In efforts to improve the efficiency, racers have experimented with everything from ultra-light flywheels to lightweight, low inertia wheel-and-tire combinations. In general, their attempts have improved a vehicle�s ability to accelerate and put power to the ground. In some applications, the side effects of an ultra-light flywheel negate the benefits. For example, drag-racing vehicles depend on a near-stock-weight or heavier flywheel to store the necessary amount of energy for an explosive launch. Since the launch is the most critical aspect of a drag race, most racers can�t afford to give up launch quality by using a lightened flywheel to pick up a slight improvement in acceleration. Of course, other forms of racing, which are less dependent on acceleration from a dead stop, can benefit from the use of lightweight flywheel setups. In contrast to lightweight flywheels, a lightweight wheel-and-tire combination has no real drawbacks as long as enough wheel strength is maintained..."
RESPONSE TO THE QUESTIONS ABOVE: It also depends on how an engine is balanced, internally or externally. I am under the impression that BMW balances the rotating assembly separate from the flywheel and that the flywheel is then zero balanced (much like a chevy small block). There are balancing holes drilled on one of the counter weights of the crank (I believe the rear), and there are also balancing holes drilled on the flywheel. If they did them together, they would only need to drill balance holes at one point (the flywheel). Conversely, a big block is externally balanced, so the rotating assembly is balanced by machining the flywheel. Your clutch assembly should be "zero" balanced in much the same way so that it can be replaced without affecting engine balance, but realize that even this balance is not perfect so any time you replace your clutch, there is potential for affecting the balance of the motor. Center force dual friction clutches are notorious for causing major balance issues when the flyweights get stuck and don't slide out on the diaphragm. I broke my pressure plate strapping bands 300 miles from home in 2007 and the pressure plate disc was off center by over 1/8". It vibrated so bad you couldn't see out of the rear view mirror clearly. I made it home, replaced the clutch and the motor was fine. Over time, sure, you might wear the rear main bearing prematurely with an extreme case of imbalance like that, but a zero balanced flywheel will not cause an issue. Long story short, you're worrying WAY too much about this. Of course, any time you lighten a flywheel, it should be zero balanced.
My thoughts on an lightened flywheel on an m10: If you like spirited driving, you won't regret a lightened flywheel. We're only talking going from 15 lbs to 13 lbs, which is not enough difference to affect drivability, but is enough to actually make the car faster. I'm running an 8 lb aluminum flywheel with a MUCH lower moment of inertia than a lightened stock flywheel and I love it. It makes rev matches and gear changes soo nice.
the downsides to a lightened flywheel are less rotational inertia to get the car moving from a stand still, slightly harder to maintain steady speed on the highway, slightly worse mileage due to less rotational inertia, and maybe a slightly less smooth engine.
GM has been using aluminum drive shafts for years, most likely in an effort to minimize fleet average fuel consumption by .001%. On an e21 with a stock flywheel? Waste of money. Focus on lightweight wheels and the flywheel as they have a much great affect on rotational inertia and acceleration.