Vavle job time. Unless someone roasted the engine, the bottom end looks like new. You have the aluminum block with siliconized cylinder bores, so unless it was grossly overheated, they will be nearly unworn at this milage (they wear at 1/5 the rate of high nickel cast iron, and this design usually goes 500,000 in the iron version without ring wear....).
You may in fact only need valve stem seals, not even a valve job.
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!