I drive a 1982 240D automatic, and indeed it won't give you whiplash with its acceleration. However, I find it quite reasonable to drive (except when I've got the A/C on in the summer, which robs too many precious HP). The later W123 series had slightly higher output engines, which helps. I find that using the stickshift to manually shift gears in some situations helps. But indeed, having driven a manual 240D last summer made me realize how much peppier the manual is.
I've never had my 240D at 85MPH (I tend to adhere to the speed limits), so can't help you out there. That's probably close to the max speed of the car, so no wonder it sounded like you were pushing it.

__________________
1983 300TD 240K - 1982 240D 215K - 1996 Dodge Cummins 70K