I've just done this on my E34 525i, very very easy, got the brackets from scott at alan cowlands, cost me a fiver each, the brackets actually fit to the metalwork behind the seat, the cut out in your seat back is already there.
Two of the three holes were already drilled, I just drilled the third, scott even gave me the screws.
You will then need to run a stanley knife along the fabric, I used a bit of candle wax to stop in fraying in the future.
Scott also has the headrests in stock, you will have to check colour though, anthrecite grey is the most popular I've found, he will also supply you with the plastic covers that cover the part you have just cut, they also fix into the brackets you will have just fitted.
If your unsure, let me know, and I'll take some diggy piccys and E-mail them to you