i would assume when the engine temp gets to a certain level, ie. high, the ecu somehow cuts engine power. I found this out when i never got an airlock out the cooling system, drove a mile up the road, guage went up to red and engine shut down, cooled down a few minutes, restarted and ran ok.
same engine in my car 2.5tds
Iain
1993 BMW 525 TDS SE 150K 2.5 Turbo Diesel, performance air filter, lowered sports suspension 30mm, full stainless decat exhaust, boot-lid spoiler, OBC retrofit, E60 Trapezoid alloys