It's a collapsed lifer all right.
Don't know about the cost, if they are like those in the M103 they aren't too bad to replace.
What kind of oil are you using, and how often is it changed? More frequent oil changes or using synthetic oil may help, may not, depending on engine condition and crud buildup.
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!