At $500 for the M56 radiator, I think your approach of not replacing it is probably the right choice for me too. Shortly after I posted last weekend I read the sticker under the hood that indicates it is unlawful to replace the radiator with one other than the SULEV part since it is part of the emissions system. That does seem to indicate that an M54 part would work. For now, I think I will do the cooling system replacement without doing the radiator.
I have already experienced the dreaded M56 fuel pump/tank issue and the dealer replaced it along with a myriad of other components under warranty. I'm hoping to get a couple more years out of the car before that issue strikes again.