Power increases can be done. Ben Ridge installed an intercooler on his 300D, and was thus able to safely turn up the fuel flow to the point where he was able to get significantly more power.
In addition, there are a few other things that at least theoretically can be done; I don't believe they've been tried on an OM617 (or any other Benz diesel for that matter), but, although longevity may be adversely affected somewhat (ESPECIALLY if you don't install an EGT gauge and monitor it CLOSELY!), I don't see any reason why they won't work.
1) Propane Injection - propane does the same thing for a diesel that nitrous oxide does for a gas engine. The good thing here is, if the injection isn't overdone, you can actually
increase your fuel mileage and lower your exhaust gas temperature. THere are companies such as Bullydog that sell kits for truck engines that could probably be adapted to one of our cars, or you could try a
home-made setup.
2) Ram-Air Intake - if you can find a way to get more air forced into the intake, that'll make for some "free" power. However, I'm honestly not sure how well this can be improved upon on the 123, although I'll admit that I haven't looked closely. On most diesels, increasing the exhaust pipe size and removing the restrictions (i.e. straight-piping) is also ideal, but the exhaust pipe on a 617-powered car is already big enough that I don't think that any modifications are truly necessary. However, keep in mind that diesels like as few restrictions in the intake adn the exhaust as possible.
3) Lower Compresion Ratio - this requires an engine rebuild and for custom parts to be manufactured. What does lowering the compression ratio do? It'll make cold-starting more difficult, but it'll allow you to safely increase the turbo boost. As the engine sits right now, if the turbo puts out more than 15 or so psi, you're risking damage (blown head gasket, piston damage, etc) simply because there's too much air in the combustion chamber to fit properly; something has to give way. If the compression ratio's lowered, you could safely get the boost up to more in the 25 to 30 psi range. The only way to do this is to get new pistons made that are shorter than what's in there. I believe the current compression ratio os 21:1, and ideally you'd want the "new" compression ratio to be 17:1. The extra turbo boost clearly means there's more air in the combustion chamber, which means that you can again turn up the fuel safely.
Again, if you decide to try any of these (except the ram-air),
INSTALL AN EGT GAUGE! With these sorts of modifications done, it's real easy to push the engine harder than it can handle, and how hard the engine's being pushed is best measured by reading the exhaust gas temperature. If you mount the probe in the exhaust before the turbocharger (I would recommend this), you don't ever want to exceed 1250°F, and you wouldn't want to run any hotter than 1100°F for any significant period of time. If you mount the probe after the turbo, those numbers become 1000°F and 900°F.
Hope that helps some! I would actually like to, someday, get a second car with an OM617 and see how far it can be safely pushed, just to see if it can be done.
Also, if yo're really interested in getting the maximum output from the engine, check out this site:
http://www.dhraonline.com/ It caters mainly to hot-rod diesel pickup trucks, but might have some additional information that'll help you out.
Good luck!