I've owned a Toyota 1C diesel engine (Japanese Surplus), and it didn't have an EGR. It wasn't very old, probably 10 years old. So, I suppose that blocking the EGR wouldn't hurt a Mercedes diesel since similar models in Europe don't have EGRs.

People tell me that the diesel Beetle is not sold in California because it cannot meet the California pollution standards. I would think that a car that burns it fuel more thoroughly would also lower its pollution levels.