If he's telling you the engine is shot, has he backed that up with evidence? IE, compression test, other...?

Fuel tank is terribly gunked up with algae/bacterial flocculants is a much more likely diagnosis to test for, before accepting 'engine is shot'. Drop the tank screen, clean out the tank, be sure fuel lines are clear, etc... My bet is you'll find a tank screen nearly covered in black gunk. Replacement fuel filters will do little to improve this.

ALL of your findings are consistent with fuel starvation. You are getting good advice here from others on the thread. I just did the above job - well, last year - and all of the car's symptoms, exactly the same you've described, are gone.

Runs like new. Well, as new as a 32-yr old Mercedes diesel can feel. Which is almost as good as new.

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'83 300 SD
'68 Triumph TR 250 - The only car I ever loved more than the Mercedes; who needs electricity, anyway? - Damn, why did I sell it?!
'59 Jaguar 3.4 'Le Chat Noir' - Damn, why did I sell it?!

It's difficult to make predictions, especially about the future.
- Niels Bohr