Very true - the E36 M3 will probably have better roadholding mainly down to more rubber on the road. Handling is the perception of how the car behaves in a corner at,near and above the adhesion limits.
As said, new bushes, uprated but not excessively lowered springs, a better rear beam and quality tyres will see you a long way there. Plus don't forget to get it all set up geometry wise afterwards.
I would also say you'd want a turbo delivery that is smooth and progressive, rather than the old-school RS500 touring car type of behaviour, if you want to make best use of the performance on the road