Michael, I have an '87 300 SDL with a little over 197,400 miles on it. The engine however only has around 94,000 miles as the original one was overheated slightly when the upper radiator hose fitting broke. :-( The resulting damage took a long time to manifest itself, over two years, and that was a cracked head which grew worse over time. The trouble signs were coolant loss wihtout visible leaks anywhere in the cooling system; not hose fittings, etc. I had shut off the engine once I saw the steam and temp overheat indication, so I am still surprised at how fragile that head is.
I had the head gasket replaced due to excessive oil leakage from the front end area and the coolant loss rate grew to untennable levels over the next few months. Upon taking the car back to the dealer that had done the head gasket replacement, the cracked head was discovered. Not only that, but one cylinder had suffered corrosion at the top so deep and severe that it rendered the block unusable without major machine work (boring out and sleeve inserts on all six cylinders was one recommendation. The head was not usable either as you might suspect.
So, you have been advised correctly in my opinion, but I don't know how you can determine if the engine you are looking at has suffered an overheat situation. Mine LOOKED normal and ran a long time after I replaced the radiator before the crack in the head grew large enough for me to recognize the seriousness of the problem. I did suspect the head was cracked a few months before the problem was found, but I foolishly thought the dealer's technician who replaced the head gasket would have seen it. I believe I had described to them that I was losing coolant and had not been able to find the source of the leak. :-(
The good news is I have had darn little trouble with much else; alternator, battery, blower motor, monovalve, antenna, glow plug preheat contol unit(don't know the true nomenclature) fuse, blower motor fuse, replaced the injection pump seals due to change in sulfur content of diesel fuel a few years ago, Serpentine belt, new injectors, and old turbo/trap oxidizer unit replaced by MB, even as the third owner, and all other routine things. I immediately put HD Bilsteins on the car and they are still in good shape as well. Basically, this model is pretty darn reliable overall.
If the old radiator is there you could look at its hose fitting integrity, but that probably won't tell you much in a concrete sense about the engine. You should look to see if the old trap oxidizer has been replaced. The only way I know for sure to see if the head is intact is to remove it and inspect it for cracks. There may be other ways, but I will leave that up to the professionals on this net to answer. :-)
I am sure there are many other things to consider to determine if this is a good DIY project, such as rust, condition of components and items that don't need some sort of power to evaluate, but I just wanted to tell you my tale of woe. If I had found the crack sooner, I would have been able to replace/rebuild the head and saved quite a few dollars in the process. If the head is cracked on the one you are looking at, a new head was around $2,000 bare a couple of years ago.
Hope this helps you a little with and generates some other responses for you.