Although I have neither engines directly, I do have "sisters" of both cars.

Our 1988 300TE has a 1995 C36 engine which is the same engine in the E320 (M104) but bored & stroked to 3.6-liters.

Also, our 1993 500E, has essentially the same engine (M119) as the E420, again bored & storked.

From all the techs I've spoke to, the M119 V8 is virtually bullet-proof if you remember to change the oil & fluids & filters often.

The E320 needs to be revved in order to extract the HP & torque, the E420's M119 V8 makes so much torque down low, that you don't need to rev it, which als means better gas mileage for the same performance. Mash the accelerator, and you get even better performance, fuel economy suffering of course.

Both are reliable, and fairly inexpensive to maintain.

The M104 engine with HFM ignition does not have a rotor or cap to replace.
The M119 engine has TWO rotors and TWO Caps to replace, and two air filter elements.

Both use cartridge type oil filters, the same fuel & power-steering filter, and essentially the same spark plugs (6 vs 8 @ $2.50/each).

If I had to do it again, I'd put in a M119 engine into our wagon.

Go for the E420 if it is the same or better than the E320 you're looking at.

Good luck,
:-) neil