I decided to go ahead with the head gaskets and everything everyone here has recommended is coming to fruition. I did tell my mechanic that I wanted the job done right and would consider doing additional work as we got into the job, depending upon what we found. With the intake manifold off and the valve covers off I got a call from my mechanic to come and see the engine and discuss what he sees. First the timing chain - it was stretched 7 degrees, and he said he does not usually change until 10 degrees of stretch, but made the option open to me, as he said it is very little additional labor. I agreed to change the chain, guides and tensioner. Cams, timing gears look like new. Next was fuel injectors. Again they are worn and he recommended replacement "while we are in here" as there would be no additonal labor, only parts. Again I agreed. Also I agreed to replace about every piece of rubber and plastic involved as I want it to run right. So, I am into more money, but still within the range I thought (3k to 5K), depending upon what we find when he tears down the heads. Today he called and said he has one head off and that the block looks very good. No shiny spots - everything tight. He invited me to come over tomorrow and look as he will have both heads off by then, and I want to shoot some photos as well. I will keep you all posted.
ciao

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John Gillespie
1988 560sec - 192k miles
2006 CLK500 - 40K miles
1995 E300 - 202k miles