Disclaimer - I am not authorized to speak for any LSR sanctioning body. These are my understandings of the class questions you have asked . . .
The Classic Category has a few specific things that restrict what you can do with the engine’s induction and/or ignition systems. The BMW model 2002tii was available with fuel injection and that production style BMW FI system would be OK in Classic (Production, Gas Coupe and Altered). If you decide to go with a more modern EFI system it would move the car out of classic and into the Production Category (if otherwise legal in Production) or the Modified Category (Gas Coupe or Altered or Comp Coupe.) Also look at the restrictions on ignition systems for Classic. If you go with carbs you could run anything. Modifications to Carb intake systems are pretty much open in Classic Production and regular Production.
As far as body modifications - as has been said, - Production is pretty much as it came from the factory. If you run an air dam and/or spoiler they must have been the same as those available on the production car. You can add a hood scoop. Gas Coupe allows a non stock air dam but that air dam must not block the original air intake openings in the original grille work. A Spoiler (non-stock) will move the car to the Altered Class. In Altered the air dam may completely cover the grill intake. In altered you may run a non-production spoiler. See rule book for specific limits on spoiler size, shape and location. Modifications beyond that (with a few limits) moves the car to Competition Coupe.
There are a few little tricks to be aware of. If you don’t want to run in Production but still want to run the production engine you can install a quick change rear or a non-stock supercharger. Those changes will make the car a Gas Coupe. Or you can cover the grill openings and that moves the car into Altered. Or install a full belly pan and move into Comp Coupe.
There are some little things to watch out for. You must read the rule book in great detail to discover them all. Examples include the way you mount replacement windows varies from body class to body class. Another is the location and size of the radiator which varies from class to class.
As far as running the 2.0 or the 3.2 engine . . . look at the records for Bonneville before you decide on the engine . .
http://nebula.wsimg.com/b314ca8f5567116ebfbffbec7755fae8?AccessKeyId=1B489604A3781742F233&disposition=0&alloworigin=1 G class in capped at 2.0 liters. E class is for engines over 3.0 liter up to 4.2 liter. Your 3.2 engine will be giving up a liter of displacement in E Class.
Bonneville records for unblown gas classes:
G/CPRO - 149.815
E/CPRO - 203.100
G/CGC - 118.618
E/CGC - 210.420
G/CALT - 127.483
E/CALT - 221.953
G/PRO - 174.525
E/PRO - 205.064
G/GC - 191.838
E/GC - 216.532
G/GALT - 210.161
E/GALT - 264.621
Whatever class you end up in be sure to check the safety equipment required for a car in a class with that record speed (i.e, over 175mph requires a parachute)
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