Today was all cutting and grinding. Turns out I didn't need to do any E21 fuel tank siphoning. I just needed to bang it back a little. So with a bit of persuasion, it turned out just fine and cleared the subframe.
Installed parking brakes. E30 parking brakes fit just fine, but the crimp does not fit into the tunnel, like the E21 does, so I will need to simply tack weld it in place so it stays solid.
You can clearly see the offset. I did have to cut the frame to get it to fit. You'll see I cut much more later. i will weld more metal in place later. 
Cutting out the rear wheel well. Making room for the exhaust. That's for tuesday. 
Look at the interference on the E30 subframe to the E21 body. 
installed the diff housing and got a rear engine position. Very exciting. 
The E46 driveshaft has more of a nub than the E30 diff will allow, so I had to grind down the driveshaft to get it to fit squarely on the e30 diff input flange.
Much better!
Installed the driveshaft just to make sure it clears the gas tank hose. It clears!!
Now that I have the diff in place, I can see where the rear cover ear will mount up. Very close, but still offset. I'll need Garagistic's custom offset diff ear mounts to get this mounted!
After the installation of the diff housing, I just needed to get the input shaft location. Attached the driveshaft and now I am defining my engine position.
I welded the driveshaft center bearing brackets to the body and the front half driveshaft now attaches to the body without the need for the rear half. Effectively separating both halves independently so that I can work on the front or the rear. This is a big convenience factor for the swap.
Did some sizing on the shifter position. I can easily cut and tig this shorter to be the perfect size. This part of the swap is a cinch. 
Some more pics of the extra cut out. There are actually like 3 layers of 14 gauge metal here that make up the subframe. I plan to weld more metal higher in the frame to strengthen it back to stock. 
Some shots of the engine bay where I fit the E46 325i radiator. This has the quick connects to make it easier for installation. Perfect width. thin enough for the swap. Bad part of this is that I need to push the engine further back, if the driveshaft will allow me. Good part is I have coolant temp by going to this route on the lower radiator hose. 
Some pics of the E21 in all its glory. Not bad for a days work.
Continued to collect parts for the entire swap. Thanks Garagistic for the stainless steel brake lines, clutch line, and Z3 shifter!!
One of the setbacks i can see is a resistance of the subframe from getting pushed up as high as possible and that's due to the fuel filler. It will hit it. not that big of a deal .
Next is to sort out the fuel filter/pump/regulator area. it's clearly going to hit the half shaft.
Tuesday:
Weld subframe triangle holes in, hang muffler, cut rear skirt, relocate gas filter, put my battery on a charer, rear trailing arm work for the shock mount. Assembly ZF trans to S54! Stay tuned!!
