As always with these things it's relative. There can be some very nice cars, which are a Cat D (look at mrk's as an example), and might be overlooked as a result. On the other hand, it might have been bodged back together and is hiding a load of quick fixes. Of course the same can be true of non marker cars - standards of work don't automatically improve or deteriorate just because it's a Cat D.
Usual things to look for would be pre accident and during repair documentation, and when the car was written off. As the values have been lowish for the last few years it could be very possible that the car was written off for something very minor. On the other hand, if it was written off as a £30k car there's a different complexion.
Judge the car on its merits, as always, but unless it's local and you can be fully satisfied and sure of what you're dealing with, I'd just look at a higher mileage example without the marker.
Good luck though as the E46 M3 market at £10k is a difficult one. Probably better off buying privately from an enthusiast or a specialist (if affordable).
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