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With the engine off and the trans in neutral you're good for something like 20 miles, but you MUST KEEP THE TOW SPEED UNDER 30MPH.
Your w123's transmission has the fluid pump setup so that the driveshaft can turn the pump. This is why it's possible to tow start an auto w123.
With the engine idling in neutral to keep the fluid flowing and cool, and all the parts lubricated you're good to tow as far as you have faith. I still wouldn't tow a running car very fast though.
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