Yes, I am thinking to transplant a new engine and transmission. GM has started to release a new line of crate engines. It's called their E-rod line and what's available now is the LS3 (2010 Corvette motor). You get 2010 emission compliant motor, CARB certified, catalytic converters, engine control module, wiring harness, evap system, electronic accelerator pedal, etc. Its a complete plug and play system.
Now I think this is overkill for the W108 chassis (430 hp, 424ft-lbs torque) but they are also releasing their "value" motor, a 5.3L LS engine with an aluminum engine block probably at the November 2010 SEMA show in Las Vegas. Its been pre-announced already when the LS3 e-rod came out last yer. The specs on the 5.3L almost match exactly the V8s in the 6.3L 300SELs.
You can get more details on the LS3 e-rod here:
And yes, I plan for a long road. That's the point. To enjoy myself and work towards something to put another 100,000 miles on with modern emissions, reliability, fuel economy, and power.
My plan is to pull the motor and trans out of the car, refurbish all the mechanical systems (brakes, steering, suspension, etd) , and at some point put in the same motor, cleaned up rebuilt, back in, or change out to a modern LSx GM crate engine (I know this is blasphemous to some).
I ran into your website when I got the crazy idea to do this and scoured the web to find others who have tried something similar. I even saw some wild OZ-Benz posts from members who get a little too angry/excited by projects like yours.
Oh, here is my baby, bought a few weeks ago. Very, very clean, body and interior, just need a good mechanical going over.
All the best,