M103 has nowhere near enough torque to handle a 2.47 diff in a W126. The 300E has a 3.07 and its about perfect. The use of only 2/3/4 is annoying, but it drives ok, and you can easily force a first gear takeoff if you want with the shifter.
A diesel can handle the 2.47 in a W126, we had that setup on our now retired parts car....its a little slow to accelerate but cruises at 75 great since it has better low end torque than a M103.
So far I've found the M116 to be a perfect fit to the W126 for all uses, and the 617 is optimal for 0-60mph driving and city driving....the gearing and torque makes it fly around town. (with a 3.07 and 2500rpm torque converter) The gassers are a bit slow on the getup and go in the city unless you shove excess fuel into them due to the 2nd gear start, more of an issue with M103 than M116.
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