I happened to run across exactly what sounds like your problem. Read:

The (infamous) B2 Piston

and

B2 Piston Repair

It sounds like the B2 piston often breaks around 100,000+ miles, which causes flares from 1st to 2nd. You can fix it with the transmission in the car, but need to lower it a bit in a W123. I will be on the lookout for this in my cars.