Here are the steps I used for adding rear headrests to my 1988 325ic:

The whole process took about 1 hour and I'm kinda picky, so you may be faster than that.

1. Open the convertible top. Gets it out of the way.

Headrest Components

2. Remove rear seat bottom. There are two press-in connections on the
front corners of the seat bottom. Pull these up and the bottom of
the seat is out.

3. Remove the seat belts. (optional) I did this just to get them out
of the way, but it's probably not necessary. Using a 17mm socket,
remove the two bolts in the bottom corner of the seat compartment.
Fold the seatbelts up over the convertible top compartment cover.

4. Remove the seat top bolts. There are two bolts that hold the top
portion of the seat on. They are directly under the bottom of the
seat. 17mm socket needed to remove them.

5. Lift rear seat top straight up.

6. Cut 4 holes roughly 2 1/2cm from back (bend in leather) of seat.
The final holes will be roughly 2 1/2cm in diameter.
Suggestion: I would first cut smaller 1 1/2cm diameter holes and
make sure that your headrest inserts match up with the headrest
brace. This will save you from having leather that bunches up.
The braces have a set of tabs on them that need to insert
into the back of the seat for correct installation.

7. Install the grommets(black) in the leather. In order to get the
best fit for the grommets, I used my index fingers, one from each
side, to spread apart the seat padding under the leather. This
allows the grommet to insert past the padding. Add the grommet
retainers (white) from the inside of the seat and fit them onto the
grommet. (Your fingers will be sore after that tiny chore!)

8. Assemble the headrest brace onto the seat. This requires a 10mm
socket. The threaded portions are in the seat already.

9. Insert new headrest into grommets.

10. Reassemble seat.

Enjoy!