I have a 1981 240D manual transmission that I love but have been very frustrated by running out of gears at 25mph .(shifting from 3rd to 4th). And at 70mph on the freeway it's downright frightening!!!
So I swapped in a 2.88 rear end, replacing the 3.69. The 2.88 rear end is a one year only, 1985 300D, TD, CD, but not the SD.
I've read this would make the car an even bigger slug than it is but, quite the contrary, it even seems to have better acceleration. Also now, I can shift from 3rd to 4th at about 48mph and freeway speeds are much, much more quiet. A word of caution, if you go looking for a 2.88 from a parts car, get the Speedo from that car as well as the gearing in the Speedo is matched to the differential.
Buy the way I also have another 240D that has the OM617, 5 speed conversion that I did the same swap on and now at 70mph I'm cruising at 2200 rpm's.