The 4matic has a higher ground clearance than the w124 sedan.
Also the 4matic has sturdier feel to it since it is heavier then the sedans or the non-4matic wagons. The exact ground clearance number i am not sure of but i have noticed that is sits higher than our other wagon when I have parked mine next to our other e320 wagon.
As for the 4matic system, the biggest worry is the transfer case which can go bad and are about 2k. Mine was replaced at 72k by the dealer for free and my car now has 176k on it with out a problem. As mention if it does go bad you car turn it off and drive the car as a rear wheel drive.
Do a search on the board using "4matic"; there is some useful info available.
Good luck.
PS: I did have a outback and like it; sorry to hear about your dad's problems with his.