There are occasions where the BMW cooling system fails rather suddenly (V-8 E39's seem more prone than most), typically a crack in the plastic hose connection on the radiator. The buffered system is fine and you're correct that it indicates "nominal" temperature across an acceptable operating range of temps by indicating a 12 o'clock needle position.
An old style temp gauge will rise and fall slightly between the thermostat setting and its max load temp (think steep hill, high rpm, hot day). It will also show a steady rise if coolant is rapidly leaving the system through a leak, an early indicator that you might want to prepare for a rapid exit and shutdown.
The buffered gauge will do neither. After a sufficient amount of coolant has left you'll be confronted by a rapidly rising gauge and precious little time to perform neccessary action.
While there appears to be no way to modify the gauge, aftermarket systems work well and can also report oil temp (a luxury afforded M-drivers vice the worthless MPG gauge), oil pressure, volts, or whatever. These are minor mods, the kits are typically well-engineered and will not harm the vehicle.
R / John