83 300D power issues

I just dropped my '83 300D turbo off at the mechanic for a consultation. I took a trip to Seattle and on the way there I encountered a disturbing problem with my car.

After driving for a while (30-45 minutes) the car would start to perform weakly on even the slightest of inclines. I have had my car for about a year now, so I have some idea of what is normal and what is not. This was definitely not. The car would be cruising at 50-60mph, accelerator to the floor, and not accelerating at all. RPM's were constant at about 2500-3000.

At one point, on a long, steady incline, I could only maintain a speed of 35mph, down from 70mph when I hit the hill.

Some background information: the car has 175,000 miles on it, has a great service history, regular (read: early) oil changes, no major mechanical problems except for a replaced starter (06/01).

What should I expect the problem to be? I don't know enough about cars to check things out myself or even venture an intelligent guess. Transmission? Compression? Fuel filters? I'm worried that this is going to be the beginning of an expensive series of engine troubles.

I would love some advice ... anything you would have to say about what to look for, things to try, things to ask about, and/or when to cut my losses and sell the car for whatever I can get.

Thanks!