I've done it both ways, and if it were me, I'd go ahead and pull the transmission out. This makes it much easier to make sure everything is really, really clean around the B2 access cover before you introduce all that dirt into what used to be a good transmission. It also makes it much easier to properly replace the teflon sleeve and bushing that goes in before that brand new B2 piston. Not replacing the bushing can limit the life of the new piston.

If you do want to try it without removing the transmission, at least remove the drive shaft (mark orientation of both halves first), and check to make sure there isn't something up near the firewall in the engine compartment keeping the rear of the engine (and thus the transmission) from falling down more. Some people have commented that the age of your engine mounts could have a lot to do with how much the transmission tail will come down. Makes sense to me as softer engine mounts will have more give.

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Gary Thompson
Georgetown, TX
1995 E320
1984 300D