Well to be honest we all thought (wrong) that the M3 was in another league, and were surprised by the result, and it's never easy to admit that a four pot can show a V8 its tail lights on a run till 6th gear.
However if we put some numbers in perspective, that explains the result:
The 7R's setup is rated at 380bhp and 480Nm / 354lbft from 1800-5500rpms, for a weight of around 3251 pounds
The M3's setup is rated at 425bhp and 415Nm/ 306lbft at 3800rpms for a weight of around 3527 pounds
That's an advantage of "only" 45bhp in peak power for the M3, clearly not enough to compensate for a deficit of 65Nm of torque at least throughout the rev range, and 276 pounds of extra fat.
The race just confirms these numbers.
PS: We're not comparing it to the GTI but to the R.