Date registered: Mar 2012
Vehicle: 2 W123 300D's and 3 W124 wagons
Location: Seattle area, but out a ways
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The short answer is yes. Any OM603 engine will fit. I bought an OM603.96something engine today for $600.
An OM606.96n from 1997-99 can be made to fit, if you are relatively skilled (or buy beer for guys who are). I recently bought one of these too. But they're much more expensive than OM603's (unless your name is TheDon and you are one lucky skunk in the junkyards of Florida). Mine cost $3400 (TheDon's cost him only, if memory serves, $300). Has only 48,000 miles on it. These are rapidly becoming hard to come by, because with not much effort 300 hp or more can be coaxed from one, and more and more people are discovering this and thus are hunting for OM606.962's. Shh, don't tell anyone.
300 hp is also possible to obtain from an OM603, even a 3-liter one, but people haven't caught onto this yet. In either case, it requires rebuilding your injector pump with larger elements (which costs around $1500, give-or-take), then either swapping-in a larger turbocharger ($400-750) or else adding a supercharger ($400-7,000) or both. Plus an intercooler of course ($100-$500).
Speed may not necessarily kill, but it does get expensive fast.