I had a 1986 2.3-16 and just turned it over to my son who turned 16 last summer. When he was 4 and the car was pretty new (I am the original owner) I told him he could have it when he got his license one day, figuring that was so far off in the future... Anyway, he is a good kid, but like all kids they often do not listen to you. In this case he not only listened he heard and remembered and kept me to my word.
The point is the car exhibited some of the conditions you have described when I stopped thrashing it regularly and began using it as a commuter to work every day. When it (and I) was younger, I spent about 30,000 miles of the first 100,000 (it now has 206,000) at speeds closer to 100 mph than 70 mph. It used about a quart of oil every 1700 miles from day one, and I treated it to synthetic oil all its life. As my right foot lightened up and I drove closer to the legal limit more, the car seemed to plug up the catalysts and an occasional blast with the throttle wide open would blow crap out for quite a while. At least that was my theory.
We took the head off as it started running poorly about a month after my son began driving it to school every day, and he traced it to no compression on the first cylinder. I have a post in this and the "Hot Rod" sections on the beginnings of this problem. The issue turned out to be a burned and cracked exhaust valve. The engine is going back together slowly but the car should be back on the road next weekend. The rest of the engine was in perfect condition - original cylinder honing cross-hatching still visible, no ridge at the top of the piston stroke, no signs of a leaking head gasket, no erosion or corrosion of the head water passages, etc.
I would now attribute some of that crap that came out of the exhaust pipe at full throttle to poor combustion of the fuel. The injectors have never been changed. What they do is better described as leaking fuel rather than spraying it, and I switched to Platinum spark plugs way long ago when they first came out. This car really works best with Bosch Copper plugs, which are hard to find locally. I ended up using FastLane to get them after Benzmac and others on this site made it clear the car will not run right on any of the new Platinum plugs. So, new injectors are going in once the head is back on, the Copper plugs are already in, and we will see what happens.
Once the head rebuild is done (consisting of new exhaust valves, (all 8 intake valves are fine and are being re-used), new springs, guides and seals for all 16 valves) I can give you an idea of what the final cost was. Present projections are under $2k.
While it is staring at me, daring me to leave it there, I am going to change the water pump too. It is the original water pump and does not leak, but after 206,000 miles I figure it needs to be changed now to spare my son's (and my) knuckles some wear and tear getting to it when it leaks a week after we get the engine back together. By the way, I only used MB anti-freeze with a wetting/anti-corrosion and cavitation agent (RedLine Water Wetter) in the car and changed it at least every three years.
The way I look at it the car turned out to be a lot tougher than I expected and it is clearly worth the money to keep it running. While it may not have a lot of resale value, that was never the point. It is a blast to drive and you could never duplicate it for the cost of repairing the head. Good luck and I hope this helps. Jim
1986 Euro 190E 2.3-16 (291,000 miles),
1998 E300D TurboDiesel, 231,000 miles -purchased with 45,000,
1988 300E 5-speed 252,000 miles,
1983 240D 4-speed, purchased w/136,000, now with 222,000 miles.
2009 ML320CDI Bluetec, 89,000 miles
1971 220D (250,000 miles plus, sold to father-in-law),
1975 240D (245,000 miles - died of body rot),
1991 350SD (176,560 miles, weakest Benz I have owned),
1999 C230 Sport (45,400 miles),
1982 240D (321,000 miles, put to sleep)