I have a 1982 300D that I installed a Chevvy 4.3 liter V6 and it's T700R 3 speed auto with overdrive and locking torque converter in, and I LOVE IT! The Chev engine is VERY reliable, MUCH better than a Mercedes - most of the V6's go well over 200K with no problems, and they are VERY smooth running, powerful engines that deliver GREAT fuel economy. I get around 28 mpg on the freeway, at speeds of 75 - 85mph, and around 20mpg around town driving. With the overdrive and locking torque converter, the engine rpms are only around 1650 at 60 mph, 2900 or so at 100 mph. The car ALWAYS starts immediately and runs very smoothly. Since installing the GM engine/trans almost two years ago, I haven't had to do ANYTHING to the drive train. The engine is over 100 lbs lighter than the diesel, so the front of the car sits higher than it used to, but your car's engine probably weighs closer to the V6's weight.
I had the conversion posted on my web site until very recently (changed ISP's), but if you are interested, I could email you some pix, etc...
Keep in mind that the 4.3L V6 makes more power than the small block chevy did when it first came out (up to 200 hp in the vortec versions!), and is shorter, so easier to install than a V8. It has the same bell housing pattern as the 350 engine, which it is based on. The TBI engines are very easy to swap because the electronics is not too complicated, but the later vortec engines make a bit more power.
If you have a good place to work and a good set of tools, you could make the swap... it took me about a month of evenings and weekends. The biggest problem was widening the tunnel to accomodate the T700R4 Transmission. I made the engine pan shorter to clear the front crossmember, but the pan from a 4wd Blazer looks just like what I made, and would work ok, I think. I did have to make up a header for the drivers side exhaust, but that wasn't too difficult. Be sure to use the GM cruise control, as the Mercedes cruise is fraught with design problems and fails early, whilst the GM works forever.
The T700R4 transmission is smooth as silk, and doesn't have any strange problems like the mercedes transmissions do. The engine is smooth-running, and the car drives very well.
Just my opinion! BUT, everyone that's ridden in it likes it too....
'82 300D/4.3L V6
'77 Jag XJ6
'85 GMC S15
'65 Clark Cortez
'85 Kubota DIESEL tractor - see, I DO like diesels, in their place!