Faster, larger, beefier, probably. Lighter? Maybe a little, but I bet most of the weight savings that comes from lighter components will be eaten up by enhanced size/content (BTW, doesn't the E39 already have aluminum suspension components?). But it will also certainly be more expensive, and the M5's price can already fairly be described as stratospheric.
My guess is that the CTSv will be priced the same as or less than a 540i Sport; I bet it's a low-50s car, given the price point of the CTS and the fact that GM will have to compete on price more than anything else. For that kind of money, the CTSv will deserve a hard, long look.
Further, once you get past the techno-snobbery, the current iteration of the small block Chevy is one of the world's truly great engines. The pushrod design means its extremely small and light for its displacement, and GM has done wonders with improving upper rev range breathing. It's no 8K RPM screamer, but it doesn't have to be. The most amazing thing, to me, is that with all that displacement and power, Corvettes can still get nearly 30 mpg on the highway.
And, if a horsepower war really begins in earnest, there's always the 8.1 liter...
The HACK said:
What most seems to forget, is that the M5 is on it's last production year...The NEXT generation M5 is going to be lighter (aluminum alloy suspension parts, seems to be the norm on all new generation BMWs now), beefier (either a 380 HP twin turbo inline 6 or a 500 hp V10 BEHEMOUTH), and given current BMW trend, much larger.
Dethrone the king of luxury sport sedans? Not likely in the near future.