There's nowt wrong with the 1.9, with the engine being smooth it loves to be revved when needed, its not a hot hatch but perfectly acceptable in everyday traffic.
Going back to the E89 Z4, I would take the article with a pinch of salt, the trademark is the long bonnet of any Zed so it doesn't quite figure in making it shorter without changing the concept. The latest 4 cyl engines are already well behind the front axle making it 50/47 weight distribution. I can see BMW could shorten the front end as there is plenty of space in front of the engine. I feel BMW should shrink the current Z4 to Z3 proportions.
Tim.