420SELs seem to have the highest value retention of all the W126 series... the 380 and 500 are often very cheap, and the 560, when the show up on eBay, are not that expensive - I would imaging the 560's engine size puts some people off due to perceived expensive running costs (petrol) whereas in most peoples minds the 420 seems a good compromise. The 380/500 are 1st generation W126 and seem to be worth much less than the 2nd generation.
Just looking on eBay while I write this, there are four 420SELs on offer, two are asking about $2.5-3K ea, and two are asking $8-9K.
If the overall condition on your 420SEL is above average, then you might consider shopping around and getting the engine fixed if you can find someone who will do the work for under, say, $2500.
TIP: with the good $A against the greenback, buy all the bits you will need from Autohausaz and then just get the local guys to do the labour.
I've never heard of a chain let go - have heard of it jump teeth on the sprockets or bust up the plastic sliders. After its all fixed, put a note in your service log book to change the chain and sliders again in 160,000km time, no exceptions.
I.