I would stay with the 19" wheels. For non-competition track use, there's no advantage to going to 18" except a slightly lower price.
Wheels
www.edgeracing.com
http://tcklineracing.com/wheels1.htm - these guys race BMWs, you can see TC Kline himself on Speed TV SCCA events.
Your street tires are squealing, therefore scrubbing off speed as heat BUT they are also WARNING you audibly that you are approching their limit. Going to a Hoosier R compound tire will definitely make your car stick but it won't give you much (or any) audible feedback. When you exceed the limit, you break loose with little feedback. If you spin (and don't wreck the car itself) you'll probably flat spot a set of $1000 tires, making them good for use as a glass top coffee table.
It''s best to take tire changes a step at a time. Since you are on street tires now, it's probably not a good idea to go to aggressive R compounds. Consider a middle of the road, more forgiving R compound tire like Kumho Victor Racer V700, Yokohama A032, or Toyo Proxes RA1. All of these have a tread pattern that will allow some wet traction, and cheaper than Hoosiers. Most Hoosiers are for dry use only. These will also last longer than Hoosiers.