It sounds as if the problem he's describing is similar to the rev-limiter, except that it happens at 5k RPM. That is, the needle bounces around?
According to the following document:
http://www.bmwclub.lv/files/Tab_3_M54_Engine_X5.pdf (page 45)
The idle speed actuator is the idle air control valve. It reads as if your problem occurs when the valve is stuck in the open position.
There are plenty of threads on here about cleaning the ICV, theoretically that should solve your problem.
Also, NEVER rev above 3k if the motor isn't warm. ALWAYSALWAYSALWAYS warm up a motor before flogging it.