Hmm. Well I am the owner of an M3 as well as a 997. I don't think that one can say that the M3 has disproportionately low torque. Nor is the fact that the block is iron especially related to the bhp or rev limit. Other engines manage similar specific bhp figures with aluminium blocks.
BMW do seem to have solved the M3 big-end bearing problems whereas the 996 RMS problem is still happening on the 997, what seven years after it first appeared? Check out the 997 forum.
I suggest that the fact that the next M3 will have a V8 is more to do with the new M5 having a V10 than anything else.
But I do agree that the Porsche approach is more likely to be to increase the capacity. Although why everyone picks on 3 litres is beyond me. why not 2.8 or 3.1? I very much doubt that Porsche will re-cycle an old engine block, it is not really their style nowadays. And the base Cayman, when it appears, will be a big seller, enough to justify a completely new engine. And no doubt the 987 Boxster face-lift will pick it up in due course.