I am getting ready to try the oxygen sensor test this week as well. My 300E does the EXACT same thing as yours. Idle surges (you can see the oil pressure gauge needle fluctuating as well). It started out doing this intermittently, and now it's doing it at idle all of the time. I'll bet when you kick it into reverse, you can almost get it to freak out consistently.
Although some techs in this forum will scream at me for doing this, I had disconnected the air flow meter by the air filter. The problem is still there, by with the absence of the air flow meter information, the surge cycles are longer, more like relaxed breathing. My 7-yr old daughter even recognizes that it's a problem, because she mimics the surges!
I drive this car daily, and I got sick of sitting at stoplights with the car bouncing from the surges. So the disconnection is just to live with the problem until I can do some more diagnosis and figure out the fix.
I had already had a new temperature sensor replaced, and changed out the air flow meter to no avail. OVP was replaced for another problem a few months ago, so now I am down to the O2 sensor. Hope that works for you too!
And NONE of my MBs surge like this normally! And the 300E didn't until recently, so don't let anyone tell you that it's normal!
2009 ML350 (84K) - Family vehicle
2001 CLK430 Cabriolet (71K) - Wife's car
2005 BMW 645CI (124K) - My daily driver
2012 Mustang V6 (60K) - Daughter's car