Well, i am not sure that IS has taken over the segment from BMW. From 99% of comparisons that i have read, BMW has come out on top. Even if you could disable VDIM (you can do it now too BTW), i doubt that IS would beat BMW in handling and braking. BMW has always been known as a "driver's car." Remember, in all the reviews, IS has been criticized for it's numb electric steering & overall handling feel. It is Lexus best handler for sure, but has not overtaken BMW in this area. Performance is more than just straight line acceleration. If you look at most magazine specs, then you will see that BMW exceeded IS in every category not related to straight line acceleration...some of this you can blame on VDIM, but others you cannot (like braking).
Where IS is clearly better than BMW is luxury features and reliability. I agree with your statement about German cars. Has there been problems with the new BMW 3-series?? I have not looked into this.
Is Lexus really coming out with an OFF switch for IS?? I must have missed this on Clublexus. Can you show me the link?? It's funny because Lexus was very adamant about not offering this OFF switch because they claim that VDIM in IS was aggressive enough.
As for the G35, i do not think that you would like it because there is quite a bit of road noise. My partner at work has one...a 2006 model. It's fairly noisy on anything but smooth pavement.
And Mark Levinson is truly amazing!
As for not buying German cars, i agree partially. Reliability has not been good in general. As for politics, at least, BMW is not French!

And didn't Japan kill many Americans at Pearl Harbor and beyond in WWII?? Germans have been supporter of US policy until the past few years. And even now, they are not that anti-American as most European countries. If BMW was French, then i would completely agree with you.
Now, don't get me wrong...if i were to buy a sports sedan today under $45K, then i would pick IS for sure. However, i just want to provide some balance into your discussion.