Yes, moving down a bump in spring pad size will accomplish the lowering.
I suggest you use stock springs with one bump lower spring pads, together with sport Bilsteins.
Or, you can do what I did on my '91 300 E and use comfort Bilstein and stock springs, go down a bump on spring pads and change to a wider and 5% less aspect ratio tire, i.e. from 195/65/15 tires to 205/60/15 -- wider and stiffer tire made a huge difference in handling.
I, however, have Sportline rims which are 7 inches in width as opposed to the 6.5 inch stock 300E rim, so not sure if you can accomplish this.
'91 300E, 207k miles