I went through similar thing with my 85 W123. I too used a heat gun and a scraper to remove the sound deadener. I didn't notice much of a smell. Maybe I didn't get it that hot. In stubborn areas, I used an electric scraper (multitool). Then solvent to get down to bare metal.
I coated new and existing floor metal with several coats of DOM16 (similar to POR-15 and Miraclecoat). I used a Dynamat like product on the tunnel and firewall, but not on the floors. I wanted to leave them so I could inspect by lifting the carpets. Not sure, but I think I added some underpadding to the bottom of the carpets to compensate.
jjfranky123 when you say "upper pan", I am not sure exactly what you mean. On my W123, there is just one layer of metal floor pan. However in places, it forms the top of the frame rails that run under the floor as part of the structure. The floor pan doe
is of course have a thick asphalt/rubber type sound deadener coating.
Couple of pics of floorpan - white/grey/black is the sound deadener covering the rusty metal floorpan. Then frame rail below that (top rusted metal removed)
Closer pic
