To have a head rebuilt like that does cost quite a bit of money. You could probably get away with a head gasket and valve seals if the car was not overheated. The bill on my C36 for a complete head rebuild (the previous owner did this thankfully) was nearly $4000.
You might also ask them how much to do a motor swap, since Dave Hendy has the perfect motor. They may be more forgiving to do that easier job. If its thousands less total with the motor, then it is probably worth it. You'd also have a car that is much easier to sell, since the general population would probably want a 50,000 motor over a 200,000 motor with a rebuilt head, and you've saved yourself thousands. For the long haul, it really is a gamble either way. 200,000 mile motor with the original bottom end, or 50,000 miles motor with the original head gasket. Which will go longer without a major failure, who knows...
I would ask Hendy, especially since he's close to you, to make sure you get the next replacement wiring harness that comes his way.
As for the SLS, the shocks run around $400 each, accumulators $100 each, and valve $300.00.
There's no kit for putting in regular shocks that I know of, so fabricating one correctly would probably be more expensive unless you've got some German Engineering savvy running in your blood.
I rarely see a 300e/E320 transmission make it past 200k, but there are plenty of forum members similar anecdotal evidence to the contrary. I've never had one done, but I imagine $1500-2000 done right? This stuff usually happens with little warning, but there's some clues. If it takes more than a second to get in reverse or a forward gear for example.
I suppose your immediate options are:
A: Sell yours for $1500 then fork out another $4000 for a nice lower mileage example, like the one I listed with the rebuilt head, wiring harness and 100 other things. If you needed to fire sale it you could get most of your money out of it.
B: $3000 for a head rebuild plus $1000 for a wiring harness with a 190,000 miles car. Might be worth $3000 when finished.
C: approximately $1500 for a motor and swap plus $1000 for a wiring harness with a 190,000 miles car. Might be worth $3500 when you're done.
D: just do a head gasket and valve seals for $1500 plus $1000 for wiring harness. Might be worth $2500.
E: Quit your job or give up your nights and weekends, be down a car for a while, and do all the work yourself other than head machining if you desire.
I'm just spit balling, and I'm sure folks will disagree, but option A or C look the best to me. I'd rather spend my free time enjoying my cars or relaxing than doing heavy wrenching on them. Little things are fine, though.