One more thing. The W123's were never about performance, and the performance of the 280s / 280E's back in the day was "mind blowing". I would keep any W123 STOCK. No engine changes etc. Shoehorning in a V8 for the sake of making it faster takes away the charm of a W123, and generally doesn't indicate love for the car IMO.
I happened to drive the lowest W123 possible, a 1979 200D 4-speed manual. The car was obviously slow, yet that didn't bother me at all. It was the feel of the car and the way it drove that got me. Honestly, I'd be quite happy with a 55-hp / 60-hp 200D, or the even rarer 220D. I'm a W123 enthusiast, so ANY model would satisfy me, even a gas-guzzling 280TE! Speaking of which, I would love to have the US-only 300D Turbodiesel (W123) and the 300CD Diesel / 300CD Turbodiesel (C123) coupes which were only sold in the US!
