If the head is really off, that's half the repair. To replace the valves and cam should take no more than two hours or so (with the head removed). Parts cost should be <$1000 if all your replacing is the chain, valves, and cam. What worries me is if your connecting rods are bent or damaged. There is no way the repair should cost what they have quoted you. I couldn't imagine it being more than $2000 in labor (if they work SSLLOOWWLLYY). I would have it towed from that dealer to either a better dealer (that is more competent) or a Mercedes specialty shop. I know great ones in PA but I imagine it wouldn't help much if you not too close (towing is $$$). I'd definitely keep the car, or even consider doing it yourself. Get the car back, send the head to a machining shop, have them replace the broken components and do a valve job, pop it back on, re-time, and poof: new engine. It wouldn't take more than a weekend to reassemble it as an armature, if you are mechanically inclined. I did a procedure like this for another car of mine.
Though this is what I would do; the choice is yours and it depends about how much you like your car and a dealership that is ripping you off. $100/hr. is ridiculous; my MB dealership (biggest in PA) is $65/hr and I consider that a lot. Oh yeah, 25 hrs. for labor means incompetence or they are making you a new head out of solid gold.

Good luck on whatever you do,
Dr. Adam T. L. Delecki