the reason I first just said "wow" is that that sounded like a lot of skimming, about .040 thou. I did it lots on Detroit iron with minimal pitfalls but as to aluminum on iron or aluminum on aluminum I havent read much of anything on it, even in racing circles.
Id guess going to 10:1 compression from 9 wouldnt actually be a big deal, the motronic regulates fuel and stuff and would probably equate to more mileage but as to power id guess the gains would be minimal to none.
My personal experience to something would be close to an old Kawasaki 900 I had. First thing I did was pop in 10:1 pistons (larger bore) and resize it to appx 1075cc...minimal gain. Next addition was a "hot" ignition...again NO gain. Next was smoothbore larger carburetors...minimal if at all in gain. Next was a Kirker headder...zip. Next was Andrews 2x cams (just one step above stock) WHAM! just like a turbo was installed! Everything else was done and perfect for the cams and the gains but I did it all backwards and didnt see any improvement till I was done.
I dont believe compression alone will make enough difference for anyone to even mention on a project such as yours, thats saying that taking that much material off the head wont cause any weakness. .040 is a LOT concidering piston quench areas and valve to piston clearance, just the quench area alone will cause a dramatic difference in emmisions and spark knock (detonation). One example is the big block chevy engine, had closed chambers with 10.25:1. In the early 70s from the governments self proclaimed energy crisis the auto industry dropped compression ratios down to 8:1-8.5:1, in this particular engine it picked up almost 70 HP. Some of the reasons equate to the unshrouding of the valves, a greater quench area and a more free breathing cylinder face for more flow even though the compression dropped almost 2 points.
I have no idea why I got into this besides the fact that compression in itself with no other changes wont make much of a notisable difference...I think.
95 E34 530I V2.37
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