Thanks for the suggestion. I am pleased to announce that I have solved the problem.
My workshop finally installed the new decel dump valve, solving the vacuum leak. However, as Steve mentioned, the valve had to be neutered. The electronic switch is activated by a push-rod mechanism behind the injector system, and by moving the switch out of reach (a distance of a few mm), this prevented activation. Other possible solutions is to disable the power supply, or just unplug the vacuum line from the valve and stopper it.
The warm start is now perfect. The idle speed at D and P are now within normal limits (600-700, smooth idle). However, the auto trans is still a bit harsh, but none the worse.
Steve - thanks for the pointer to the offending valve. Although the warm start was fixed, we had no clue as to the function of the valve, and at one point my workshop guy was wandering around all the workshops in the locality with the part in his hand seeking a "guru" with an answer!
After that, I tracked down an exMB technician (he started in 1985, at the time of the switchover from the M110 to M103) and showed him the valve. He confirms that he had no clue as to its function, but was a common cause of hot start difficulties even then. The fix, when he was in MB, was to block the valve(!), and he opined that I need not have obtained a new replacement!!
Mervyn - I hope this helps your car.
Thanks for the assist guys