I would approach it backwards ... the best driving, most powerful feeling (best torque at low RPM) was the W126 with the 3.5L destructo diesel engine. It is a great car ... same mechanicals as most other 126s, last couple of years (mine is a 1991).
Backwards because I would look for a 1991 350 SDL with a blown engine! Buy it cheap, rebuild since it looks like you are capable, and have a cheap, ultra reliable car since the engine components you replace appear to have been the only issues on the whole car!
1991 350 SDL (200K and she ain't bent, yet)
former 2002 E320 4Matic Wagon - good car
former 1985 300 CD - great car
former 1981 300 TD - good car
former 1972 280 SEL - not so good car
a couple of those diesel Rabbits ...40-45 mpg