I would be really weary of a mechanic that was recommended by the PO and personally would steer clear from the get go. Since you've already used the mechanic I would suggest being very cautious with any further proceedings.
I'm a little confused though, you mention that you want to go after the seller for fraud or false advertising, but at the same time you are getting the vehicle repaired at no charge. If the shop doesn't charge you for the repairs (find this hard to believe BTW) and says he will go after the PO then let the shop worry about it and get the car fixed with a receipt stating "no charges will be incurred". Walk away from the mess and enjoy the car.
On a separate note, when I was in Seattle buying my 500E I had the car inspected by Phil Smart Mercedes and my Service Advisor was Derek Oakley. They found absolutely everything (including the really minor items) when they did the PPI. If you're still unsure what condition your car is in I would recommend them do a PPI which will cost approx $245.00 and includes their Starmark Checklist. You can provide this list to the mechanic repairing the car in LA to insure nothing is overlooked.
02 C32 AMG
84 190E 2.3 5 Spd