From a pure specs standpoint:
Straight-line, full on acceleration they are both equally quick.
I think one of the quicker times for the ISF from RoadFly TV, they go it to do 0-60 in 4.2 and 12.5 sec 1/4 mile, traps about 114 mph which is about what the E92 M3 does, the E90 sedan would "probably" be a tick or so slower.
Handling wise, it depends on which year ISF. Lexus added an LSD in 2010, and did a complete overhaul to the ISF suspension and steering in 2011+ and in 2012 they upgraded it even further with better shocks and wider wheels.
The E92 M3 was significantly faster than the early 2008-2009 ISF, we're talking almost 10 second per lap around Virginia International Raceway. After Lexus updated the ISF in 2011+, the tables sorta turned. It started posting identical or quicker track times compared to the M3 but most people only remembered how the M3 wiped the floor with the early ISF so that reputation still sticks with the ISF unfortuantely. The updated 2011+ ISF was also quicker than the C63 AMG around the track.
Reliability is no contest, the E9x M3 suffers from random electrical glitches that is unheard of in the ISF community. They also have random rod bearing failures that could GRENADE the motor if not caught in time, it's not linked to any year or age of the motor so if you own one, think of sending your oil for analysis as part of your routine maintenance. Another big issue is with the throttle actuators that will die and leave you stranded without warning. Think of it as another $3000 for parts and labor as your regular maintenance. Aggressive driving will lead to premature clutch failure in the DCT transmission, it's not a typical clutch either, it's a dual wet clutch that needs the transmission opened up to change out. Think $$$$$. While I think the S65 is a marvel of an engine, I mean 4 liters, 8000+ revs? Yes please! On the other hand, the ISF's 5 liter V8 and transmission is completely overbuilt and should stand the test of time like no other.
If not going 10/10 and daily driving both cars you can definitely feel the power difference between the ISF and M3. The ISF has very good torque so driving around is much more enjoyable, the M3 is very lacking in low end torque which is expected since it's a lower displacement higher revving motor. It's especially felt when you have passengers, I drove about a dozen or so E9x M3's and with a couple people it feels slow around town, be prepared to get roasted by a lot of cars from stoplight to stoplight if you're not launching it and revving to 8k plus.
There is more aftermarket support for the M3, so yes you can make big power out of the M3, the ISF is kinda stuck right about 400-410whp with headers and exhaust since the ECU is locked down like ADX Florence. If a naturally aspirated 500HP (crank), reliable sports sedan is good enough for you, look no further than the ISF. If you crave more power, look elsewhere. Then again once you starting making more than 500hp I'd be looking into AWD. Oh another bonus by going with ISF is much better fuel economy, the ISF can hit high 20s on the highway thanks to it's extra 2 overdrive gears and good torque to chug it down the highway at 2000 rpms. The M3 can only dream of high teens.
So let's sum it up.
Acceleration.
M3 = ISF
Handling
M3 = 2011+ ISF > 2008-2009 ISF
Reliability
ISF > M3
Aftermarket
M3 > ISF
Fuel economy
ISF > M3
Daily duties
ISF > M3
Subjective categories.
I thought the M3 would sound better than it did with the 4.0L 8000+ RPM V8, I figured it might some kinda Ferrari-ish. Not even close, it sounds nice but not nearly as beefy and intimidating like the ISF. Once the secondary flap opens up, I think one car magazine said the ISF sounds like a cross between an Audi R8 and SLS Mercedes AMG.
The M3 definitely has a more motorsport racing car feel, from startup to all the "race" settings that's configurable. You can adjust how hard the transmission shifts, damper settings ect. You kinda have to beat on it to get rewarded, it feels more special, but the ISF feels more refined. I think of the ISF as a grown up version of the M3, they both are great cars and will do the same thing if asked. The M3 will do it with while having a tantrum while the ISF will do it gracefully without much drama.
