The 87 was the fastest diesel made until the 1998 E300D. Turbo chargers do that to diesels.
Its down 50hp but its a solid motor, in a solid car, with a solid trans. I really like the updated later W124's styling. All in all its a pretty hard package to fault.
If you want the same car, but with balls get an E420. You will lose about 10mpg which will be offset by the increased cost of diesel over premium. So the cost is very similer and you get over twice the power.