The leatherette is okay, but I prefer the leather, it softens up nicely
after a bit and is really durable, more so than the leatherette
(especially is sub zero temps)
Anyway, I swapped the seats in an e36 318is for some e36 M3 seats,
found the seats on ebay, cost about $350 and an hour to put em in. I
would assume the e46 would be similar, just find a nice interior
package (front and rear) and spend an afternoon replacing.
Skins would be a huge PITA and they most likely would not be as strait
as stock, aftermarket leather would also be hugely expensive.
IMHO your best bet is to just get replacements off ebay, you can
probably find the dash pieces there too.. Good luck!!