Two things (well three when you factor in the reliability thing) that made me want to pick up an IS was it's looks (always liked them from when I first remember them coming out) and the handling. Car might not be fast, but it handles extremely well for it's size and weight. So does the E46 BM mind, but I still prefer the IS over the E46...
But I know exactly what the OP is getting at. If the IS was fast, the MPG and stupidly high tax would be overlooked, or if it was slow but got great MPG, it's performance would be overlooked. But to have poor performance AND poor economy - you just can't put it on paper as a good car!
I still like mine though; nicest car I've ever owned. Still enjoy driving it, and it's never a chore. So still get's the thumbs up from me