Hmmm. Now why does this sound familiar?
Check ALL the vac lines, especially the one for the computer on the fender. If at all iffy, replace. How hard are the hoses on the idle control valve, and does the modulator hold vac? What about the climate control?
Check the mixture too -- the TE was doing exactly this before I fixed all the leaks. Shifts better, sounds better, etc.
You should also consider the possibility that the cat is plugged or the O2 sensor is shot, both will cause idle running problems. The cat will cause sluggish performance and poor milage as well. The O2 sensor will cause overlean running.
And it is possible that the valves guides are worn enough to cause idle problems. I'm not too worried about mine, they are only 40,000 miles old, but if you have lots of milage on there with no head work, they can be a problem.
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!