The heat shields will be fine, they only contact the rear of the backing plate anyway. You don't want any part of the shield to get between the pad and the piston, otherwise it won't matter.

Ideally they would not touch the backing plate, but they will work fine no matter what.

I use fine sandpaper to remove the corrosion in the caliper bore above the seal, there is usually a ton of crud there from embedded dirt when the calipers get overheated, and the piston is both very difficult to get back in AND sticks if this is not removed. Piston should go in with light pressure (I can get the rears on the W124 in with finger power, for instance, but they are tiny).

You must be VERY carefull to remove ANY traces of abrasive if you do this -- otherwise, the caliper will inevitabley seize.

If the pistons "spring back" a bit when pushed down firmly, you are fine.

The brake lube is exactly what you want to use, it doesn't run off during assembly like brake fluid does and makes the job easier.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!