I have not specifically looked at my 300SE to check the power steering fluid, but every other MB uses trans fluid in the power steering. So oil in there sounds very bad to me. Usually there is a disc shaped filter at the bottom of the reservoir.
I was talking to a mate over here about my 300SE yesterday - only 2 people in oz rebuild the valves - cost about $300 each, or something like that. New airbags from MB are about $400 ea from memory. So no, it is not cheap to fix up, but if done properly, it should last many years. We are going to look into aftermarket valves in a few months time to see if they can be used instead - a lot cheaper.
What parts are you after? My mate has about 3 complete M189's for spares - he even rebuilt a fourth for a guy in Uruguay (from memory). And another guy in Melbourne has heaps of parts for them. Not cheap though as he checks them all and guarantees their operation. And I have bought stuff from a guy in Cali who was parting out about 3 W112's. But no, if you just look on ebay, there is not a lot there. These are an enthusuasts car with low numbers, so mainstream advertising is minimal.
And lastly, there are no 'sins' in car resto. I am not a purist - not one of my MB's has been kept standard. Like agillot, a lot of people are terrified of the extra complexity (and cost) of a W112. Well if the body is stuffed, the air suspension knackered and the M189 suspect, and you don't have the money or desire to fix all of these, then really all you have is some special trims! Buy a good condition W111 for (relative) peanuts instead and enjoy! You could part out the W112, but first see if anyone wants a matching numbers W112. They may be out there, and would be thrilled at the chance to revive one of these cars. For example, see this - M-100 Message Board - Arts other 300 SEL
This guy rescued a W112 long wheelbase from a wreckers yard, where it had another car sitting on top of it! I bought my finnie from the same yard - they pointed out the W112 to me, but I didn't know much about them back then and when I saw the dent in the roof I said no way. But it actually popped out quite easily!
I too am grappling with similar issues with my matching numbers 300SE coupe. I am a hotrodder by nature, and my ultimate coupe is really with a V8, not the 6. So I am liaising with a fellow in New Zealand to see if he wants to buy the W112 and I would then buy a LHD 220SE coupe that I know is lurking nearby (which has less value in Oz) and hot rod that - put in the air suspension and diff from a 6.3, and an M117 motor from a no-smog W126 500SEC. Plus various body mods. So I will try to sell the W112 first. If no one wants it, then the market has spoken and it will get the transplant. Any purists who claim sacrelige afterwards will be asked where their $ was when it mattered...
Good luck with your decision!
PS - check out the brakes you have also - if they are early Dunlop calipers, they can suck up lots of $ too... But people restoring these cars may pay a good price for serviceable ones, if you can handle them sitting on your shelf for possibly a long time.