Mine was mechanically well sorted, it was the body that was hurting...
(see my repair @
http://www.peachparts.com/shopforum/diesel-discussion/322612-just-picked-up-smacked-95-e300-diesel.html)
I've managed to put a little over 5K on it so far, and can routinely get over 700 miles before I even think about refilling. So far, I've been consistently averaging 31-33 mpg, with a freeway high (Greeneville, SC to Chesapeake,VA) of 34 mpg.
To clarify about power... Driven lazily, this car shifts early and stays low in the rpm band. Works well for me 95% of the time as I go/leave work early and the terrain here in Tidewater goes from 0 feet above sea level to a breathtaking 24 feet. The highrise bridges over the intercoastal and other crossings are it's biggest challenge.
If you are willing to let the engine rev, it pulls well right into the 5K range, and acceleration is more than adequate.
Since I've been driving this car, it has become one of my favorites. We enjoyed the 87 TD wagon for 13 years, and the low rpm torque (after playing with the ALDA a bit) was amazing. That's about all I miss about the wagon. The 94-95 update brings a much nicer car in my opinion, I've owned at least a dozen W124s over the years (including a 5 speed 300E) and the 94-95 is my favorite part of the range. Similar to how the 83-85 W123s were just "nicer" than the early ones.
If you think your OM606 is sluggish, I would expect a thorough review and adjustment of the linkage would help. Lubricating all the ball joints and following the manual for linkage adjustment always improved my NA OM 60X engines. Other things like bad injectors contribute to low(er) power as well.
Jim