well, after a bit of searching (this caught my interest), I've found out it can be done but it's not just a straight bolt-in mod.
The E46 airbag is a dual stage affair so the wiring is not the same as our cars.
I dare say it could be wired up to work but by its very nature,it's going to be hard to test. It may be possible to fit a E36 airbag in the wheel,hard to say without having both parts side by side. Your also going to have issues with the slipring - not enough channels on the e36 & the e46 one is too thick.
Have a read through this thread.
http://forums.bimmerforums.com/forum...steering+wheel