I'd love to see that eight grand work sheet the dealer provided you with, it sounds like they did a lot of "padding". At 180k the X probably needs a cooling system refresh done, as well as a suspension overhaul. New cats, I've seen cars go many more miles than 180k with no issues of cat failure, but if yours have an aftermarket set up from your local exhaust shop would be substantially cheaper then BMW cats.
The 5 speed E53 is a rare bird, those that have them love them those that don't think hard about trying to find one. Since yours has a little history to it (being in the family for a while) I'd think hard about holding on to it and getting her back in proper shape.