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I have had this problem, but it is not unique to this car. The "grinding" you are hearing is the syncromesh trying to match the transmission and engine speed from 1 to 2. As with most cars, the largest gear-ratio difference is between 1 and 2 -- the ratio in 1 is always much greater than 2, than say 2 is greater than 3. This is why you get this grinding sound between 1 and 2, but normally not 2 and 3, 3 and 4, etc. The sound you hear is the synchromesh being overwhelmed trying to match speeds.
This isn't so much of a problem with the gearbox as it is just a limitation on this kind of car -- go google this problem, and a lot of people (E46 M3 included) have this issue. This is not a drag car -- it does not like it when you slam shift from 1 to 2. You can, but your synchros will go out. This is a road course car, where you never shift lower than second gear.
Try this: shift quickly, but smoothly. Don't just try to jam the gear lever into 2 as you brush 7000 rpm. Let the lever slide into place. Slow down just a tad and let the synchros do their job.
I know this may sound disappointing re: "but its a BMW, it should be able to shift at high RPMs." Indeed, it can, but smoothly (at least from 1 to 2).
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