I recently installed a 328i engine on my BMW E36 320i. Now I know that E36 328i come with a bigger exhaust with two openings, not sure if they are dual pipes. But the 320i come equipped with a smaller exhaust with one opening. What are the advantages of installing a bigger exhaust, or can I still user my existing one?
It's always best to use an exhaust tuned to the engine you've got. The smaller exhaust will probably not allow enough gasflow for the engine to breathe properly, strangling it at the top end and thus reducing the power you can get out of it.
Equally one that's too big can be bad too, as it reduces the gas velocity, which on a naturally-aspirated engine helps to 'scavenge' the exhaust gases from the cylinders.
What you are mentioning are just the exhaust tips of the rear silencer. Those dual exhaust tips are mostly cosmetic and do not really have any technical function. As long as your existing exhaust pipe and catalytic convertor have the same diameter as the parts used for the 328i model you will be fine. Please be aware that the catalytic convertor especially is important in this case, since they can be quite specific for an engine and the exhaust flow that the engine generates.