How feasible is it to put a limited slip differential in a W123 300TD?

From what model?

"Possible" addresses the ability to do something.
"Feasible" adds the element of cost to ability.

The lowest cost method would be with a center section ("diff", "pumpkin") with a 210mm ring gear vs. the 185mm ring gear of the W123. A 3.07 will be the shortest ratio readily available, and either a LSD carrier from a 2.82, or a 2.47 LSD carrier with a ring gear spacer. The 210mm center section is a bolt in replacement for the 185.

Back when I was autocrossing my 84 280 E euro we built up a limited slip 3.69 ratio. We took the innards from a limited slip diff from the 190 4 valve and put it in a 123 casing. It required a spacer on the ring gear to work. I believe there is a thread about it here.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

It was a few hours work for my favorite machinist, Homer.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

I sold off the key parts here when done with them.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.