Welcome to the forum, glad you decided to join and with an Imola ///M as well
To answer your question re the steering wheel I am not aware of anyone who has fitted the BMW performance wheel to a Z3. It think there are a few reasons for this none of which means its impossible though (cost, slip ring conversion, electrics, sensors for the rev display I think that wheel has, etc....).
Yours should be a facelift ///M as its production was after 04/99 and so you should have the uprated SRS system which includes a 2 stage airbag so in principle you should be able to use a more modern 2 stage wheel (there are examples of the later Z4 wheels being fitted with slipring adaption.
I ended up fitting the Raid wheel which was a strightforward fit (after a lot of research) with the correct hub adaptor for the Z3 slipring.
I did a full write up here:viewtopic.php?f=18&t=23787
There is more info on my other post on Bimmerforums about adapting other BMW 2 stage wheels here:http://forums.bimmerforums.com/forum/sh ... ?t=1396188
So in my view if you want a smaller thicker wheel with the feel of the BMW performance wheel but without the flashing lights then the raid is a proven solution (they do an alacantra version). If you set on the BMW performance wheel and you already own one then it would be an interesting project and should in theory work if you can figure out how to make up a slipring adaptor (assuming there is no fundemental changes to the way current BMW wheels are mounted to the steering column).