From what you’ve described and from my own diesel transmission experience I don’t believe a rebuild is in order.

If you haven’t already review Steve Brotherton’s classic and excellent primer on MB transmissions:

http://www.continentalimports.com/ser_ic20242.html

It helped me diagnose two transmission problems - flaring both times – which only required addressing vacuum related issues.

You may also want to post in the MS Diesel Discussion forum for many more replies.