Sand casting of alloy is not that uncommon basically exactly the same process as for cast iron except lower temps. Having them use alloy in a once off like these is quite likely especially given Mercedes desire to move towards alloy where ever they could. It is likely that some of the innovations that made it to the 60x motors may have originated with these. It is quite likely there were many innovations in those motors that never made it to production. If they didnt say the block was CI, it would be possible that they were trialing alloy blocks for diesels back then. One can only guess what the pistons were made of, maybe some vanadium fiber reinforced alloy or ceramic composite? Back when this all happened, they are the sort of things that diesel research engineers were working on.

Alistair,
Were you involved in any sort of engineering research 30 years ago?

It is important to remember that most hp numbers out of Germany are DIN , not SAE like most USA numbers are. I recall many saying, comparing SAE with DIN is like comparing ponies with draft horses !!

In answer to the OP, yes it is possible, if its an old motor it may not last long, Broken pistons may be on their way.

__________________
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I no longer question authority, I annoy authority. More effect, less effort....

1967 230-6 auto parts car. rust bucket.
1980 300D now parts car 800k miles
1984 300D 500k miles
1987 250td 160k miles English import
2001 jeep turbo diesel 130k miles
1998 jeep tdi ~ followed me home. Needs a turbo.
1968 Ford F750 truck. 6-354 diesel conversion.
Other toys ~J.D.,Cat & GM ~ mainly earth moving