In Europe, BMW’s expanding model line-up has transformed the German automaker’s brand perception from the pistonhead’s prerogative to the arriviste’s wheels of choice. While the mighty M3 continues to rival Porsche’s 911 for street cred, and the previous gen M5 is still considered the Mack Daddy of sports sedans, BMW’s move into SUV’s and mass market motors has wounded its perceived pedigree. Is the hatchback-style, entry-level 1-Series another case of brand defilement, or is it a look back to classic small BMW’s like the 2002?

Judging by its looks, the 1-Series is to the 2002 what Gangsta Rap is to Rhythm and Blues. Whether you’re grimacing at the three or five-door, the BMW 1-Series is one seriously ugly ultimate driving machine. From its goofy proportions, to its misjudged details, to convex flame surfacing (that makes the car look like a pot belly pig from the side), this Bimmer is a bummer. While some people consider small, ugly vehicles “cute,” they’re wrong. Perhaps that’s why Bimmers’ bureaucrats have decided that the States might get the next, easier-on-the-eyes version in 2008, with three-box, two-door styling.

Fortunately, the 1-Series’ interior design is modern, sculpted, strong and coherent. The plastics are not up to Munich’s usual standards, but price considerations have otherwise inflicted a welcome, dare I say nostalgic minimalism.

The iDrive nav/menu screen is a perfect example. The foldaway screen lives on the top of the 1-Series’ dash; it’s a far safer and more elegant solution than the Teletubbies-style hutch sheltering Bimmer’s upmarket iDrive carriers. It should also be said that it’s well past time that BMW dropped its ergonomic arrogance and adopted standard icons and HMI procedures.

Euro-hacks have criticized the 1-Series’ interior for being cramped. Not so: there’s ample room in the front. Seriously volks, while the 3-Series mini-me’s rear headroom won’t find favor with anyone over 6″, legroom is carpool-compatible. Put another way, the 1-Series is less space efficient than a similarly-sized Golf, but more spacious than a MINI. Considering the fact that the diminutive Bimmer is Europe’s smallest rear-wheel drive (RWD) car, the rear space is a mitzvah.

The same cannot be said about the 1-Series’ visibility. It’s yet another high-beltlined car that shows the world your armpit if you should ever, Gott behüte, do the urban cruise.

My tester came equipped with the second least powerful engine in the European 1-Series range: a 143hp 2.0-liter four. (The 116i mostly sees rental and fleet service.) The 118i’s miniature powerplant proved tractable and linear, with a useful power band from 1200 to 6200 rpm. So motivated, the 1-Series may not be particularly fast (0 to 60mph in 8.4 seconds), but it is fun.

The basic recipe is sound enough: RWD, short-wheelbase, reasonably low weight and BMW’s traditional 50/50 weight distribution. To this formula BMW adds a dollop of ingredient X: aluminum.

Munich’s mechanical maestros fabricate much of the 1-Series’ front suspension and subframe from aluminum, as well as the axle, suspension struts and pivot bearings. Out back, they’ve blessed the 1-Series with BMW’s justifiably famous five-link rear suspension; the same greasy bits that give the 1-Series’ big brothers their remarkable poise and ride quality. Better yet, Bimmer boffins have tuned the 1-Series’ multi-link’s toe-in, toe-out and camber angles to increase cornering agility.

The overall result is a fantastically chuckable and agile package that feels more solid than any other hatchback I’ve ever driven. BMW’s much maligned electric steering works perfectly in this application. Around town, it’s strictly point and squirt. At speed, the 1-Series’ helm feels as meaty as its perfectly sized steering wheel.

The 1-Series’ suspension set-up is comfortable enough for older drivers who still kick out the jams from time to time. Above 95 mph, the car gets a bit bouncy, reminding you of its short wheel base. At autobahn speeds, the 1-Series is sensitive to crosswinds (perhaps the only real disadvantage of the RWD concept). Certainly, there are better long-distance executive cruisers.

As you’d hope, you can fling the 1-Series around with genuine confidence. Imagine blasting out of a traffic circle in a small car with fantastic feedback, without any torque-steer corruption. Nothing else in this category comes close; you’d need a Porsche or Lotus to better it. This Bimmer’s combination of agility, strength and compactness (and a small turning radius) make it a surprisingly useful urban runabout. Piloting the 1-Series, U-turns are a joy and rural roads paradise.

Upon returning the BMW, I felt a genuine pang of loss. Either I’m getting old or BMW has gotten better. It’s probably both, but the latter is the stronger reason for giving this car a [close your eyes until you’re behind the wheel] thumbs-up. BMW may be destroying its exclusivity by making something for everyone, but what a way to go.