Quick update:
Even after replacing the radiator the overheating saga continues. Two incidents that really made me reconsider keeping the car - so this is up for sale because I have my hands full with the X5 and needed one car to be fully functional and issues with the E46 were becoming a headache.
- I was traveling and parked the car at the airport for a week and on my return the darn bleeder screw leaked and I had a quite an adventurous ride back home - bought the replacement on my way back but the bleeder screw top broke and I didn't have tools to pull out the rest, so had to stop several times to make it back home.
- It overheated in moderate traffic and had to be towed home.
Diagnoses: turns out the temperature sensor may not be functioning right - radiator fan does not kick on with the temperature (it does turn on with A/C though) - so I'm hoping all my A/C related, transmission and heating issues may just be related to the temperature sensor - and now that I think back, I've had these symptoms for a while because I've mostly traveled on highways so did not need the fan very much anyway and whenever I was in traffic of stopped at a night, coolant temperature would get as high as 235 F.
So I'll replace the sensor today and report back on where things are.