Yes, Dextron III is ok for your transmission.
But doing the transmission is a little easier said than done. You have to drain the torque convert and the transmission. I don't know what is exactly involved, but it's not too easy. And you must be VERY VERY careful not to get any contaminants (dust, etc) in there, as the trans is very sensitive. It should be changed at 30K mile intervals, no doubt about it.
I would have it changed at the dealer and pay the $120 or whatever it may be. It's worth the money! For any other info, do a search (top left corner) and you'll find plenty of info!

I'm glad you found the site (I think I was the one that referred you?)

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2006 E350 w/ 155k miles (Daily Driver)

Previous:
1993 300E 3.2L Sedan w/ close to about 300k miles
2003 E500 Brilliant Silver (Had 217k miles when totalled!)
1989 300E with 289,000 miles (had for <1 yr while in HI)
03 CLK 500 cabrio (Mom's)
2006 C230k (Dad's)
1999 S420 (Mom's/Dad's)
2000 C230k Sport sedans
2001 CLK320 Cabrio (Mom's)
1995 C280 My First Mercedes-Benz... (155k miles. EXCEPTIONAL AUTOMOBILE. Was Very hard to let go of!)