In January of 2003, my wife (then fiancée) and I took a ride in Leonardo
's modded WRX sedan (which he sold long ago). This was in Puerto Rico.
I have no idea exactly where we were when this happened, but we were on some main road and an E46 M3 convertible pulled up. The driver was solo, and there were four of us in the WRX. None of us pencil-thin teeny-boppers, either.
We smoked him, I mean it wasn't even close. Leo's car wasn't even THAT extensively modified, at the time. Now, this says two things to me:
1. WRXs can hold their own, very well
2. The BMW driver was probably a dolt.
Which takes nothing away from Leo's driving skills. Just stating that, even modded, the M3 should've done better - convertible or no.
(Just getting that out there, since I know someone would bring it up.) I've no idea if that car was modified, which is another factor for consideration.
Now, I do consider the Impreza and the 3-series as of different classes. (And of course, they are.) This doesn't mean they can't compete--any car can compete against another--but they're not intended rivals. I'd buy a BMW for a solid transmission and smooth-accelerating engine, plus luxury goodies and a better dealership experience. But I'd still own a Subie.
My current favorite is the new 3-series AWD wagon: