Running 20's can be done on any E39, provided you get all the elements required to do so done correctly. Raising your car is not the right way, it'll look 'wrong'. You shouldn't interchange M5 springs/shocks with non M cars as they're differently rated - those who go ahead anyway tend to find the car sits too high at the front etc. 10.5 rear wheels work on an E39 and are within clearance and tolderances.
Have a look around here on some of the posts I've made about running 20's on an E39, to do it properly, you need to run low on coilovers and the design of the wheel is important as wheels with a deep lip blend in to the aesthetics and sizing of the car's looks much better than 'flat' faced/designed wheels.
You'll most likely need to roll your rear arches and perhaps even have them pulled by perhaps 5mm or so, it'll depend on the shape of the tyre shoulder you have/run into exactly how much.
Here on bimmerfest, you'll have more of the responses above as the views by most members is more of an 'oem' only level. 20's on an E39 and more importantly, done properly is in the realms of much higher levels of modifications and thus, other forums suit better where you'll get good information. Do have a look around online, speak to local reputable wheel/tyre specialists and bodyshops capable of doing this kind of work too.