Hilltop (and others) can remap the OEM ECU on the dyno, but I believe it invalidates any BMW warranty.
BMW sell a "Power" ECU which is effectively mapped for a decat and filter, and it invalidates your BMW warranty. If you have one.
The PC5 and Bazzaz can be removed and don't invalidate the warranty AFAIK.
You pays your money and takes your choice, an ECU remap can release far more than a piggyback. Rider modes to suit you and more driveability.
Why will the K&N make it worse...with the decat you removed a blockage/backpressure and allowed the engine to breathe better. More fresh air can be sucked into the engine per 720degree revolution of the crank (Suck+Squeeze=360, Bang+Blow=360). As you add more fresh air you need to maintain the correct air:fuel ratio and the right timing to achieve maximum burn efficiency. At idle if you had an AFR gauge you'd see 14.7:1 (14.7parts air to 1 part fuel) . At full power I think engines that are not forced induction aim for 13.3:1 under load, turbo engines on the other hand aim for 11.7's to be safe.
Makes no odds but basically by decatting you've changed the air:fuel balance and it's all groovy at WOT (Wide Open Throttle), BMW will have put in a load of head room for safety's sake, you'll lean it off a little but probably make more peak power for that (too much fuel dulls power but add safety through lubrication and cooling to avoiding detonation). Every OE (see VW) does tricks to get their engine maps to pass emissions and MPG tests with flying colours. Want less pollutants in the tail pipe put in less fuel. They put a 'hole' in the fueling at 4-6,000rpm etc under light throttle, the timing is dulled and this is the magic people get back after a remap, a mapper doesn't have to pass emissions tests he just whacks in timing advance and fuel. Voila it all feels great.
The K&N, has bigger physical holes for air to get through than a stock paper filter, there is less resistance to the high negative pressure suck of the engine...and at truly high speeds, the ram effect of that direct intake. More air in...decat...more air in K&N = further moving away from the ideal air:fuel required by the engine to work optimally.
So that's why... hope that helps. If you're not asleep.
(Apologies in advance for typo's I expect a few)