I'd recommend a TE to any of my friends. I have, in fact, and two friends now have them! I have a '91 TE 4matic and I understand the concern but I believe they are an incredible car if maintained. The self-leveling suspension that everyone moans about has only two weaknesses, AFAIK
, and neither is a big deal on a car of this quality.
First, the N2 cells will eventually wear out. You can DIY for <$200 and you're back to day one performance. The shocks either leak or they don't. If they don't leak, they're fine. They are pricey, but I don't know of too many TE owners who have had to replace leakers. Most of the time I have heard of anal retentives replacing $250/shock (that's the GOOD price) on principle and I just shake my head.
Sceond, you can prevent alot of headaches by flushing the system every two or three years and probably never have a problem other than the N2 cells. My 4matic has 205k miles (anybody got a higher mileage 4m?) and the cells are original. I really don't feel a problem in the rear but I'll probably change them in the near future.
The self-leveling's biggest weakness is its lack of adjustability. If you hear you can adjust the level compensating unit's fulcrum in the rear for a lower ride, you are asking for trouble. TEs weren't really meant for autocrossing, so live with the ride height and enjoy the car. Besides, IMHO TEs look really bad when you start to "dress" them up. Boy racer chrome wheels and tinted windows make the car look exceeding pimpish. I know, I've seen a few like that.
The biggest caveat with a 124 TE is definitely service history. 4matic or not, a pampered car will last longer with less maintenance because it's had less wear and tear on it, and when it has had problems, they were dealt with as they arose. Fixer uppers can be ugly on any of th newer MB's, starting with the 126s.