Three things can make the rear squat -- bad valve or linkage (or missadjusted), bad struts, or bad/empty pump.

The N2 spheres aren't bad, less than $100 each and not too diffucult to replace -- that is why it bounces so hard -- the tires are the only springs back there at the moment.

Droop is not enough fluid in the struts, either from the valve not sending it there or the pump not supplying it, or it is leaking out.

Have someone familiar with this system check it out. Can be expensive to fix.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!