I think the problem is in the speakers. It's my understanding that they use very low end paper speakers that just don't deliver great sound. I haven't considered putting third party speakers in, but if BMW had offered a really nice sounding option, I would have paid the extra $2k more for it. As it was, I don't really mind that I spent the $875 for the "premium" sound system, because if it sounded any worse I would be pulling my hair out during my long commute....but it seems like $875 is overpriced for the quality of the upgrade.
My Lexus GX-470 has a Mark Levinson system in it and a used replacement amp alone cost me $800...I think the initial option price on that system was $3.5k.