My 1984 300D Turbo, with recent radiator, thermostat, coolant flush, fan clutch, temp sender, etc etc stays at 85-90C almost ALL the time. Sometimes on really hot summer days with the AC on max it might get to 95C, and on cold winter days with heater on max it might be 80C, but that's not often. The gauge should never jump around - that is an indication of electrical problems. Mine is rock steady. I've never seen this car get to 100C, ever (that's 212F btw). Any W123 diesel with the cooling system operating at full capacity should be the same way, IMO.
FWIW - the later OM603 turbos were not quite the same. They made more power (and therefore more heat), and they can get to 100-105C under more extreme circumstances, where the OM61x would not. Keep that in mind when comparing engine temps, make sure the numbers you're discussing apply to the correct engine!
