In a one word answer: Yes.
What you are looking at is the dust boot, for lack of better description. These are sold along with the internal brake pistons seal.
This site (FastLane Parts) sells them together as a kit for your car, #N1050-40226. For both sides (depending on the brand of caliper you have) they list as:
Caliper Repair Kit ATE (Teves) Retail: $30.00 FastLane Price: $12.73
I would not use compressed air or anything else. I would try to use a pick or other tool to remove it. Leave the piston as is, just inspect carefully to make sure it is not scored, has corrosion or any other damage. The dust boot is there to keep road dust, moisture and general crap off of the brake caliper piston. It only works well and lives along time when it is kept ultra clean and dirt free. (These are your brakes, after all!)
Make sure the the entire edge of the caliper is very clean (including under the dust boot) and then coat them lightly with a silicone spray on both sides for long-term protection, let dry, then reinstall.
The key is to get the dust boot over the the edge of the caliper without tearing it. If I were going to use a tool, it would be one that has very rounded edges so that the new rubber does not get torn or cut.
'03 E320 Wagon-Sold
'95 E320 Wagon-Went to Ex
'93 190E 2.6-Wrecked
'91 300E-Went to Ex
'65 911 Coupe (#302580)
Last edited by haasman; 12-08-2003 at 02:30 PM.