Tough call, Johnson. But I think you are the only one who can make this decision.
1. How much is the car worth to you now? How much can you sell it now? Say it is $x k.
2. Let's say you put in a MB rebuilt engine for $5k on your car. Would you be happy to get that car for $(x+5) k?
I believe there is another member on this forum who bit the bullet and got a new MB 2.5 diesel engine installed on his 90 or 91 300D. He is very happy.
Isn't it interesting we replace every part on these cars so they last long.