Just move to Delaware and keep it ... we'll pass anything.  My 240D is probably as bad as yours, and it passed. Not only that, but I hadn't done the brakes yet, and it turned out the car had nearly zero caliper function ... and it passed.
Seriously, though, if the engine is good, with only 191k on it, plus a 4-speed, you should be able to get some decent money for it on this forum. The euro factor might help too. If I didn't already have a hopeless rust pit, I'd come up and grab it.
The problem you'd have with parting it out is that can take some time, plus you'll have the car taking up space for a while. And eventually you end up with a shell you have to tow to the junkyard. But, if you have the experience and the time, my guess would be you'd get more money that way.
You could also get a second opinion on the rust. But, as anyone here will tell you, unless you want a project, rust of any kind is bad news.
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1987 300D, arctic white/palomino--314,000 miles
1978 240D 4-speed, Euro Delivery, light ivory/bamboo--370,000 miles
2005 Jeep Liberty CRD Limited, light khaki/slate--140,000 miles
2018 Chevy Cruze diesel, 6-speed manual, satin steel metallic/kalahari--19,000 miles
1982 Peugeot 505 diesel, 4-speed manual, blue/blue, 130,000 miles
1995 S320, black/parchment--34,000 miles (Dad's car)
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