Definitely too much! You can get a fully rebuilt head for that price!!
Most of that cost is labor, so it would make sense that if you pull the head, you might as well go through it as well.
Shop around on the work though...it can be had much cheaper.
Also check the Good Mercedes Shop forum...might be some in your area...
2009 ML350 (84K) - Family vehicle
2001 CLK430 Cabriolet (71K) - Wife's car
2005 BMW 645CI (124K) - My daily driver
2012 Mustang V6 (60K) - Daughter's car