Sounds like a sudden large vacuum leak. Main cause of that in M50's is part #9 here
http://www.realoem.com/bmw/showparts...24&hg=11&fg=40
The retaining clip snaps over time and that piece will work it's way out of the intake manifold. That causes a sudden and significant vacuum leak that will make the engine behave as you describe. Go to the dealer, give them $6 or so for a new one and slap it in. Should fix your problem right quick.
Had pretty much the same thing happen to a friend's '95 525iT. Found that silly connector to be the culprit after weeks of trying to figure it out with much $ spent on new parts that weren't needed (MAF, coils, plugs, etc.). Was annoyed to find it to be a $6 vacuum line connector that breaks so often it's always in stock at the dealer.
Cosmos Black/Black 1995 540iA M-Sport
BMW Individual Exclusive Edition, 1 of 65 total, 9/25/95 Build