After reading your post last night, I experimented with my a/c today.
If I turn the dial all the way to its coldest position, the fan remains on Hi.
If I set it to a less cool temperature, really any temp less than all the way, the fan will modulate its speed.
2001 E430, Bourdeaux Red, Oyster interior.
1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".