I have an E36 and an E46 M3, and an E90 335i so I can give you a reference if you need one.
Comments:
-You'll have to have custom axles built to use the 914 tranny with the M3 hubs. $$$$$
-The big problem you're going to run into is that the KG body is relatively narrow. I don't think you'll be able to get anywhere near the amount of room you'll need to fit an M3 suspension under a stock ghia body. If you widen ghia bodies they tend to look very odd IMHO.
-Might I suggest using off-road VW hubs and then fabbing up a double wishbone rear suspension? I don't know what the width of a 914 vs a KG is, but you might even be able to use semi-stock axles, or have custom VW axles made which would probably be much better cost wise. A rear suspension is much less tricky to design then a front suspension, I'm sure you could actually find many off the shelf parts to fab it up. Look at Lotus Super 7 plans, and I'd also look at Mazda Miata rear suspension, may be the width you need?
Here's something heading the direction I think you might want to pursue:
Dobergoose
my $0.02.
Jason