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The W220 chassis has all the integrated crap, so it might not be easy to swap out the existing head unit (part of HVAC, etc.) for another. Much easier to simply use some sort of adapter that can work with the OE system.
The MB system price does not shock me at all. In the day of free and do-all $300 cell phones, they still want stupid amounts for their phone systems. And CD changer prices? Outrageous. When I bought my car I could pay $1000 for the OE changer or buy the EXACT same unit with an adapter (not an FM, but the OE adapter) for about $250 in the aftermarket. Many MB options/accessories are GIANT rip-offs.
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