OK, I promised a review on the X3, so after about 3K miles (counting one 1,300-mile road trip), here it is!

First of all, I’m not going to say that one (the X3 vs. the W163) is better because they are very different vehicles that were designed for different purposes.  I will say that based on my typical driving routine, I enjoy the X3 more, but the W163 was a better highway car and had better utility. 

My X3 is a 2006 with the 3.0 liter inline 6.  It is the standard (i.e. non-sport) suspension with 235/55-R17 Michelin Pilot tires.  Options include Steptronic 5-speed automatic transmission, premium package (leather, 4-way lumbar for front seats, auto-dimming rearview mirror, BMW Assist, and Bluetooth), privacy glass, Sirius satellite radio, adaptive (steerable) Bi-xenons, and heated front seats.  I have also added a DICE iPod interface, roof rack basic carrier, and a rear-seat DVD player (an aftermarket all-in-one unit with a headrest stanchion-mounted bracket).

Things I like better about the X3 as compared to the ML320: 

• The huge sunroof – The X3 has a two-piece glass sunroof with an electrically retractable sunshade, stretching to the headrests of the back seat.  Although it does not open all the way, the part that does open is easily twice the size of the ML’s standard sunroof.  Also, both glass sections do pop-up for better ventilation.
• Sirius satellite radio – This option is fully integrated into the factory radio
• Better iPod integration – BMW offers a dealer-installed option that’s much like the old IceLINK, but the aftermarket DICE is a better choice as it gives full control over playlist selection along with artist/title information being displayed on the radio.  Also, the BMW iPod interface is not compatible with Sirius, where DICE is.
• Sporty handling – It drives more like a car than an SUV.  While the ML was no slouch in the handling department, the X3 truly handles like a car.  It takes curves readily, with plenty of grip and very little body roll.  Steering is tight and responsive.
• Steering wheel mounted radio controls – Yes, I know this is a typical standard item for most new cars, but I didn’t have it on the ML and love it on the X3.
• One-touch windows and sunroof – One-touch windows were added to the MY2002 ML (and I added aftermarket parts to my 2001 ML), but the sunroof control is fantastic.  It has all sorts of logic, like two-taps to open both the shade and the glass, two taps to close it fully (skipping the comfort position), and functions to open the middle of the shade for ventilation when the glass is tilted.  Also, in the tilted position, there are splash guards to keep water out even in the hardest rains.
• Faster window regulators – The slow action when raising and lowering the ML’s windows was what prompted me to install Autoloc modules for one-touch operation. 
• Telescopic steering column- Yes, I know another common feature, but it is something missing on the W163.
• Lumbar support – The four-position power control works as expected.  I don’t know why MBZ thinks power lumbar supports should only be part of an expensive multi-contour seat package.  It should be standard equipment!
• Side-view mirrors keyed to driver seat memory with reverse tilt-down – Again, I know this was part of the W163’s 2002 facelift, but not something my 2001 had.
• Easier to fold rear seat – This does come at a cost.  The seat bottom is fixed, so it makes it a bit low for passengers, and also the back does not fold completely flat, but it is a pleasure to be able to make more room with one simple action instead of having to remove headrests and pull several handles.
• Firmer, seats with a more comfortable driving position – I always thought the ML’s seats were decent, but not quite stiff enough to qualify as truly “German”.  The X3’s seats are rock hard and shaped nicely.
• Leather-covered usable armrests on the door – The ML’s door-mounted armrests were made for looks.  I don’t anyone, regardless of height, could use them comfortably.  My arm always ended up on the top of the door panel.
• Anti-glare material on the dash – It’s the same heavily textured rubber-like material used on the new SLK and my wife’s Lexus IS.  It’s a great design.  The same material, color coordinated with the interior, is used on the doors and lower dash.  It’s not as luxurious as leather (or pleather), but it works well with the sporty styling.
• Better headliner fabric – I hated the velour-like headliner on the ML!  The X3 uses the high quality burlap-like woven material found in most European cars.
• Sensitivity adjustment on the rain sensor wipers – This is a great addition!  I have no clue why MBZ doesn’t pick up on this.  Also, in a strong downpour, the rain sensor will kick the wipers in to high speed automatically.  This may have been a MY2002 upgrade, but my 2001 did not do that.
• Peppier engine with sportier sound – I know the V8 ML’s had more pep than my V6, but this engine is great.  It feels and sounds like a sports car engine.  The ML (even with a V8) always sounded like a truck.
• Smoother shifting transmission – In normal drive mode, the shifting is almost imperceptible, even when driving hard.  Also, having the choice between sport and normal mode (instead of the ML’s driver adaptive system) is a welcome change.  Steptronic is also faster to change gears than MBZ’s TouchShift.
• Steearable bi-xenons – I had upgraded my ML to bi-xenon headlights and they were great, but the X3’s add horizontal movement when steering.  It makes a real difference when driving rural roads at night.
• Quieter interior – This is strictly an objective claim, but the X3’s interior seems to be quieter than the ML’s.  There seems to be overall less road and wind noise.  There is more engine noise, but it’s not an unpleasant sound.
• Better balance rear hatch – it’s much easier to fully close it with one motion, so there no need to touch the outside of it.
• Body-colored door handles – I hated the black plastic door handles on the ML!  They were always chalky with wax, which is why I added the polished stainless steel covers.
• Sideview mirrors – Not that the ML’s were bad (although the ones on the MY2002 facelift were), but the X3’s square side mirrors seem larger and easier to use. 
• Rear cargo privacy cover – I was constantly knocking the ML’s cover out of place.  The X3’s locks on top of the shock towers, so it stays put.  It is larger, though, robbing the already smaller cargo area of room.  By the way, I once saw a station wagon that had the best cover design – it retracted into a permanent mount in the tailgate.  That way, you never had to remove it for extra cargo space, and it also raised up for easier access when the tailgate was lifted.  You’d think a company as smart as BMW or MBZ would implement this in their SUV’s.
• Cargo area utility – While the X3’s cargo area is smaller, it has some nice features like sliding tie-down hooks, similar to the W164’s cargo management system.  There is a subfloor that can be raised to access the battery, spare tire release, jack, and also some available hidden storage.  This subfloor panel is reversible, with non-skid on one side and carpet on the other.
• Sharkfin antenna – Much cooler looking than the ML’s stick, but much more difficult to attach my Mickey Mouse antenna topper (it required using a Dremel to and some silicon adhesive).

 Things I liked better about the ML320 as compared to the X3:

• Smoother highway ride – The X3 is sportier, and that comes at a cost of feeling more pebbles in the road.  The ML had good road feel, but also a supple highway ride with a comfortable “dead spot” in the steering.  The X3 requires a bit too much attention on the road to make it a good “cruiser”.
• Better control in emergency/abrupt maneuvers – The stiffness of the X3’s suspension makes it handle a bit precariously sometimes.  For example, there’s a gently curving on-ramp I take that has a bump in it.  The ML could take it at nearly 90mph and feel rock-solid.  The X3 is so stiff, at anything over 75mph, it jumps too much to feel confident.  The same stiffness makes it feel more prone to rear-end slide-out on rough surfaces.  The X3 just doesn’t quite instill the same level of confidence as I had in the ML.
• Richer, more luxurious looking interior – The X3 has great fit, but there’s too much plain black plastic.  The ML was a nice combination of German utilitarianism and luxury.  The X3 is almost “too” German, nearly pushing it to the point of looking “cheap”.
• Rear seat comfort – The ML’s rear seats were as comfortable as the fronts.  The X3’s rear seat is great for kids, and fine for an adult on very short errands, but you won’t put any friends back there for a road trip.  The bottom cushion is too low and has zero thigh support.  Headroom is fine, but the seatback is too upright and the headrests are small with no lateral adjustment.  The rear cupholder is a cheesy design.  It’s actually inside the center headrest, that folds down with the center armrest.
• Cargo capacity – The X3 is rated at 30 cu. ft. with the rear seat up, and 70 with it down.  This is just about 10 cu. ft. less than the ML in both configurations.  I will say that X3 is a bit deceptive (much like the ML) in how it can carry more than it would appear.  The X3’s privacy shade also takes up a large amount of room, but is a better mounting design than the ML’s.
• Ease of entry/exit with a flat door threshold – Since the ML had a flat door threshold, it was very easy hoisting one’s self in and out of the vehicle.  The X3 has a raised threshold, plus it has plastic trim that stick out that you have to step over, plus the front seats are set further inside the vehicle.  All of this makes getting to the seat in one move impossible.  You have to sit on the edge, then hoist your legs in, then slide back into the seat.
• Higher seating position gives a better view – The X3 definitely sits lower to the ground.  It’s not as bad as driving a car in a sea of trucks and SUV’s, but it’s not as good a vantage point as the ML.
• Cruise control stalk – The MBZ cruise control stalk is a near perfect design, always at hand at 11 o’clock and easy to learn.  The X3 uses buttons on the right side of the steering wheel.  They are intuitive, but require moving your hands from the optimal 11 o’clock and 3 o’clock positions.
• Window switches in the center console – Yes, I know this was changed for the W164, but to me, window switches belong in the center console, not on the armrest!
• Touch Start – I became used to be able to insert the ML’s key and give it a brief twist to start the engine.  On the X3, the key has to be held in the start position until the engine is running.
• The ignition key – I liked the compact design of the ML’s fob key (and of course the newer MBZ SmartKey is even better).  The X3’s key has the keyless entry functions on the fob, but the blade is long and not retractable.  I know newer BMW’s have gone to a Keyless-Go type system, so that would be even better.
• The MCS – I guess if I had sprung for navigation, I’d have a nice LCD screen on the X3, but the standard radio is pretty simplistic.  I miss my large, easy-to-read LCD radio screen!
• Parking brake – I hate hand brakes!  They take up otherwise usable center console space.

Overall, I am enjoying the X3 and don’t regret buying it.  I do doubt, though, that I will keep it past the three-year lease.  Maybe by then, the GL’s will be proven and I can switch to one of those.  Really, that’s probably my first-pick SUV right now and I would have considered one, but I’m not paying nearly $70K for *any* first year MBZ.  Of course I could hope that in three years, my wife will be ready for an SUV and I can finally enjoy a nice midlife-crisis sports car

Oh, and  so far, gas mileage is right on the EPA numbers - 16 city, 23 highway.  I have seen some lower city number (just under 15), but that's only when I spend 20 minutes sitting in a traffic jam, or I really drive it like I stole it.  The ML320 was at best 15 city, but mostly 14 (and even lower in traffic or spirited driving) and rarely ever saw anything over 20 on the highway.

I'm not sure what MPG you are getting out of your ML, but mine was terrible.  If I absolutely babied it, I could get maybe 15 around town.  My normal MPG was around 14, and if I really hammered it and got stuck in a lot of traffic, I could see it go as low as 12.  On the highway, if I kept it under 70mph and wasn’t carrying a lot of cargo, I could get just over 20, but otherwise, it was 19 at best.  The X3 is getting 15-16 around town, and that’s with some spirited driving and traffic.  I got over 23mpg on our road trip, fully loaded, doing 85-90mph.  The X3’s rated curb weight is 4,067 where the ML’s was 4,586.  On a scale, my actual ML, with me in it, was right at 4,800.  The X3 is just under 4,500.  So, the ML had about 320lbs of weight on the X3.  Given that it’s much peppier than the ML320, I think the MPG is acceptable.  I will say that the MPG on the first 1,500 miles was terrible.

As for handling, I’m not sure what you mean by “boring”.  I guess if you prefer to work really hard to keep your car going where you want, then yes, it’s boring, but you should find the ML to be incredibly boring.  You are right about the identity crisis.  Basically, I think of it as a 3-series wagon without the “station wagon” looks.

Gotcha.  Still, are you saying it’s boring because it has better traction and control?