I took mine after M2 and here's my take on it.
Research year post M2 pros and cons:
Pro: More time to study for Step 1 if you are concerned for failing.
Con: You most likely wont need this time if you've been scoring well up until this point
Con (2): Almost all formal programs require a Step 1 Pass prior to attending
Pro: Preclinical knowledge is completely intact which can be fantastic for basic science or translational research
Con: Hardly useful for clinical research
Pro: It is a nice time to take a breather after preclinical and recouperate.
Con: You must keep up with your step 1 knowledge during this year to hit the ground running when you return. Step 1 knowledge is still very valuable for shelves and clinical knowledge.
Con (kinda): You'll lose some of your clinical skills knowledge from preclinical, but found it was extremely easy to pick up again. YMMV.
Research year post M3 pros and cons:
Pro: A select few research programs may require M3 completion to attend
Pro: More time to study for and ace Step 2 (the biggest bonus, imo)
Pro: If you are failing 3rd year blocks (no longer competitive for derm) and/or find derm may not be interesting to you (found something else you love), then you don't have to spend a research year doing this (2nd biggest pro)
Pro: None of the connections you make in M3 really matter and lost connections here wont hurt you
ProL the conenctions you do make during this year will be more recent and memorable for when you actually apply to programs.
Con: May lose some of your clinical skills which are vastly more important for impressing during 4th year Sub-Is.
Con: Less time to finish your project once the year is complete. I have completed 1 publication and 1 poster since finishing my research year, which I would be less likely to do if I did my year post M3.
Con: You will need to apply during 3rd year, which is already very busy and stressful.
Pro for both: Research year is very fun and I loved the extra free time + application boosts. Good PI = Good year.
Con for both: Watching your friends move on without you. Can be awful if you tie yourself to a dead project.
In my humble opinion, I think with the Step 1 P/F change that post M3 research year is the far superior option. Step 2 prep is king and having a little extra time will be great.