I went from a '01 330i to my '06 530i (255 hp) - both manuals. My 5er feels like it has less power even though it actually has 30 more hp since it's heavier. I'm thinking the '04 525 is only 184 hp -- I'm afraid you will be disapointed with the power compared to your 330.

 

I own both a 330i and I've driven 525 before.

330i FEELS like it has a lot more power than 525. 330i feels more powerful than the 530 but doesn't quite reach 550 territory.

You have to realize that the 5 series are hippos. Even though it produces more hp, it got to lug more weight. Gas mileage should be relatively the same. Maybe better with 525.

IMO, don't switch. Wait for another car or get a used M3.

 

With both in standard specs, the 5er is only approx. 80KG heavier than the 3er, so it's not as if there's a big difference in weight between the cars. IMHO it comes down to the FEEL of the car;
- I went from an E46 320d to my 520d. The 520d is quicker, but FEELS slower
- I drove a 530d (231hp) loaner when my 320d went in for a service, and in general the 530d did not FEEL that much quicker than mine, even though it clearly was. Only after some Autobahn driving did it really start to FEEL a lot quicker.

The 5er is bigger and is "softer" to drive, which in my case makes it FEEL slower than a comparible 3er. Now that I have got used to the 5er driving feel, I can also appreciate its performance (even in my 520d!). IMHO if you are coming from a high-powered 3er, you're also going to need a high-powered 5er if you want to get the same FEEL of speed... which the 525i is not!

As for a 2004 model, I'm with the rest... go for a MY which has at least the first wave of bug fixes.