I believe the suspension between M-sport and standard is the same with the only difference in the 19" vs. 18" rims respectively. IMO, the DHP would have a impact on the driving dynamics. Unfortunately, locating one in a dealers inventory to demo could be difficult.
For the HUD, if you wear polarized sunglasses the image cannot be seen. Of course this will reduce the benefit to only nighttime viewing. Would it be worth the $1k (tech pkg vs. standalone nav), if it was my money, I would rather go with the premium sound or DHP.
For reference, I do not own a X3. However I am in the process of helping my wife pick her next vehicle which the X3 3.5i is either 1a or 1b (Q5 3.0T being the other). We have test driven the X3 several times and if it were my vehicle it would have the M-sport and DHP. However my wife doesn't like the thick steering wheel (M-sport) and wouldn't touch the mode switch for eco, sport, etc. So her potential vehicle wouldn't have these options.