I'm an '07 X3 owner and thoroughly enjoy my car, however, like you, I've been eyeing the X1 for years. I especially wanted the diesel stateside, but alas, that's not going to be the case for now.
I just arrived in Frankfurt this week and have an X1d for the next two weeks. I'll try to post my feelings here when I can. So far I really enjoy the vehicle though I haven't been out on the autobahn yet (this weekend). As far as size goes it is definitely shorter in stature than my existing X3, but I don't find it distasteful at all. It is definitely NOT A3 short in visual appearance. That, my friend I can guarantee. I've been to the Audi dealership many times (salivating a bit at the S5) and always found the A3 cute, but just too short (I am 6'2" and the ingress and egress are too much). The X1, however, is a really nice size to get in and out of. Visually, regarding stature, it fits my ideal perfectly. X5's, while a beauty, look like beasts to me. I guess it's my frequent travels to europe that have me convinced that not every good, capacity holding vehicle, has to be the size of a mini-bus. I really do admire the updated X3, but if the U.S. ever gets the diesel X1 I think I will be buying one pronto. BTW, after 2 days of in city navigating I'm average 31.5mpg with the diesel. Can't wait to see what the autobahn delivers.