Sounds about right to me. I have an '84 California-version 300D and I consistently get 23mpg. Oddly, it doesn't matter at all whether I drive city or highway (o.k., on a very long trip (300+ miles) I might get 24mpg!). The one thing I have noticed is my car spins at a relatively high rpm, making me think the california models had a lower rear-end ratio. I drove an '84 SD once and it was only spinning around 2800rpm at 65 - my car spins around 3200rpm. Higher rpm will surely make the car use more fuel. Why MB would want the car to scream along on the highway like that I don't know, but I have often thought of looking into swapping the rear differential. Supposedly the rear end of '85s have a lower rear end, which makes for better cruising and mpg.

Greg