Eric,
Congratulations on your new car. 500E's are too much fun! The 500E is supposed to start in 2nd gear unless your transmission has had some hot-rodding work done to it. The kickdown to 1st is 40% or greater throttle. (or of course clicking the shifter over to first) My 92 500E will spin up to about 6300rpm in 1st gear and a solid 6000rpm in all others. Kickdown to all gears except first can usually be had through 2/3rds of the gear being kicked down into. If you are at 50mph you should be able to get 2nd (which redlines at approx 68mph) The 722.3 tranny is infamous for being a dullard on downshifts. It frequently lugs in a higher gear until you pin the throttle then gives you a rush you wont soon forget. You can either shift manually or get used to it somewhat. You could adjust the Bowden cable to alter shift points somewhat. If your interested let me know and we'll take it from there.

BTW, 16mpg isn't that bad for summer, A/C on, high speed or aggressive driving. My 92 500E gets about 20-22mpg highway cruising (75-85mph and anything from 14mpg to 18mpg in town depending on driving style. The A/C seems to really suck some MPG. I believe the EPA ratings for our cars was 14/17 so if your getting 16mpg then you are doing okay. Its always good to hear from other 500E owners out there. Congrats once again.

Hope this helps...Lee