I'm sorry to hear about the premature wear of your seal. How bad is the leak? Anyway, I think that price is pretty steep for removing and installing tranny. Personally I think Mercedes transmission are the easiest to remove and install. I've done a few 124s and 126s. I usually take a little under 2 hours to drop it (this is without air tools). A little over 2 hours to put it back. I know most people don't work this fast but $1500 to remove and install is ridiculous. This is how much I would charge to rebuild a transmission. How much do they charge per hour? Even if it it is $70 we are talking about 21.5 hours. This is ridiculos if you ask me.
Whatever you decide to do I recommend changing transmission seal as well. It costs about $10. I'm real curious to see what the extra charge would be on labor. I wouldn't be surprised if they charged you an extra $200 for a job that can be done in about 5 minutes when the transmission is down.