Diesels normally don't "backfire" because the fuel isn't really combustible in the tailpipe. If your compression was so low the fuel didn't burn in the cylinder, you would certainly notice it.

I suspect the exhaust is simply rusted away, and the the "backfire" is really just exhaust noise. Diesels are very quiet at idle, only get noisy under heavy load.

Internittant exposlons (backfire) would indicate to me a serious IP problem, so if you don't also get serious power loss, I'd not expect that.

If it started running cooler when the noise started, I suspect the muffler is collapsed inside, and the lower back pressure reduced waste heat load.

Peter

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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!