My 99 528iA WAS the same way. As did "bimmer5michael" posting on a couple of other forums, I ignored the nay-sayers, bought the COVER and replaced it. Took about an hour and no tools other than an el-cheapo plastic putty knife. <$40 for the COVER. Notice my emphasis on the word "COVER". Because that is exactly what it is. It covers the gap between the body and the glass. The SEAL between the body and glass is the adhesive that the windshield is imbedded in during installation. Search the archives on RF and BimmerBoard for more details on the replacement process.
All that being said, I agree that the cover should most definitely last longer than it does. Heck, the windshield gasket on my long gone (but still in town and still running) 86 Dodge van is STILL in better shape today than the crap I peeled off the 528. The manufacturers CAN make this stuff to stand up to the environment but it costs a little more. For instance my city supplied trash bin is made of plastic. It's over 15 years old and sits in the Arizona sun at 4500 feet above sea level from sunrise to noon. It shows NO signs of even thinking about falling apart.