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M3 (E36) Engine "Over-rev" and Engine Replacement

I own a 1995 M3.  I recently sustained damage to my engine (no compression in
6th cylinder).  BMW dealer diagnosed mechanical over-rev (through spark plug
inspection and "listening to the engine").  Through research, I found a
number of engine replacements in E36 M3s attributed to over-rev.   I have the
following questions:

1.  Have other BMW owners had or heard of this issue-I would like to hear
from you!!!
2.  What can BMW (or I) do to check engine operation (i.e. prove over-rev).
Can you "probe" the engine control unit or check rev limiter?  What else?
3.  What recourse do I have with BMW NA (this is an expensive proposition).

Please repond on the digest or e-mail to: snootful@domain.elided.  Thanks, I need
the help!!!