I would address the switch first, test it as per the MB FSM specification.
Here are some documents you might find useful:
http://www.startekinfo.com/StarTek/outside/11883/PROGRAM/Engine/107/M117_56/073-112.pdf
http://www.startekinfo.com/StarTek/outside/11883/PROGRAM/Engine/107/M117_56/073-009.pdf
http://www.startekinfo.com/StarTek/outside/11883/PROGRAM/Engine/107/M117_56/073-152.pdf
If itis OK then my next guess would be the IACV...When you unplugged the IACV idle increased. That is expected. It should run around 1500 with the IACV disconnected.
Your IACV might be sticking or dirty. That might be preventing it from properly opening/closing to control the idle.
Another item might be vacuum leaks. Vacuum leaks can cause high idling as well..
In our 420SEL's case it was a sticky idle valve. When I took the IACV out of the car and powered it with my bench top power supply. I could vary the voltage/current and observe the valve getting stuck part way though its full range swing.
A replacement valve rectified the problem.
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