Handling should be better because of the stiffer springs there should be less body roll. I would think your cornering speeds should go up.
I don't think it should hurt resale value too much. There are definitely quite a few people out there who like lowered cars. Some people may steer clear because they prefer stock ride height, but there should be enough who prefer lowered cars to balance it out.
If you have the cash coilovers might be a good way to go as you won't be locked into one ride height and depending on what set up you go with you may have various dampening adjustments too.
The really hard part of your question is regarding "bone jarring" or how bad the ride will be as that is so subjective. What might be bone jarring to one person might just be firm to someone else. Also some people are willing to put up with a harsh ride because having a slammed car is more important than the ride characteristics.
You might try posting in your regional forum and see if you can find someone who will give you a ride in their e39 with the setup you are considering. If you can find that it would be the best way to go as they you can get an idea of what the suspension feels likes before you buy and install it on your car.
Also if you go with H&R race do you know what dampers you are going to use?
E39 2003 530i: SP, CWP, PP, Manual, Sunshades, Split folding rear seats, 17" Style 42s
E28 1987 535is: Manual, Bilstein HDs, 16" Style 5v2 (from e38)[Sold]