I've had the steering vibration across two sets of tires, so it isn't that. It's also been consisent across front-to-rear tire rotation.
I've got new tierods and drag link, and just put a new steering shock on while I was under the car for the 120K service in August. (Man I hate changing the transmission fluid, has to be my least favorite task.)
I think what it boils down to is that everything rubber deteriorates on an older car. The only way to make it feel like new is to replace all the rubber. So subframe bushings, lower control arm bushings, the various links in the rear suspension, etc.
I know what you mean about newer cars feeling so much better. My other car is a '98 E-class, and it feels so much smoother & tighter than the 124. It's not so much that the 124 is bad, it's actually pretty reasonable, but the new car is just so superb. It's so smooth - I can't tell the difference between 50MPH & 100MPH, side winds don't phase it. I almost understand why people buy new cars...