It is not difficult to install an aftermarket head unit from a place like Best Buy into a 1997 E420. I am not an expert but will offer my advice until anyone else chimes in with more knowledge. I was able to get a wiring harness from an install place -- may have been a VW harness as described here but I am not sure...
You can just pop the harness on and connect the wires up as you normally would. You could also cut up your factory wiring harness but it would be a shame to do that when such an inexpensive adapter is available and will keep things clean for the next time you (or someone else) gets in to make changes.
As described in that other post, the main issue (which isn't much of an issue) is that the bose system, which I think was stock for the E420 (do you have bose speakers in your rear deck?) expects 4V input and most car stereos put out 2V low level (from my understanding). The only drawback as far as I can tell is that your volume will be slightly lower than it would be with a 4V output. But my stereo sounds just fine regardless. I suppose it's a safer/better problem to have that most systems put out less voltage, not more, and that it's still an adequate signal.
From what I understand, there are converters available that will change the signal to the 4V input that is optimal or the Bose -- in case you want to get fancy. I've only read a bit about them but it sounds like they may take the SPEAKER level outputs and convert them down to the 4V balanced input that is ideal for the bose system.
Hope this helps! But please check my info with further research, especially if you want to get the converter solution to do an optimized 4V signal for the bose system. The basic install using the VW wiring harness couldn't be much more simple and straightforward, however, and you should be fairly pleased with the results.