Replace it with what and by whom?     If it's genuine MB parts and
being done by the dealer, I can see that price.    If it's aftermarket
parts and the local foreign car shop, it sure sounds like a hosing to
me.   I'm not familiar with that specific model, but exhaust
components from the cat converter back are rarely that expensive.

I recently did the exhaust on my 1980 300SD and the aftermarket
muffler and pipes were a couple hundred bucks total.   I also needed a
new header pipe, which is only available from MB Germany.   That cost
me about another $350.  But since the original lasted 27 years, and
this one will likely last a similar time, it wasn't all that bad.

Go to any of the online parts suppliers, like AutoPartsGiant, and you
can find prices for aftermarket exhausts and figure it out yourself.

Considering the exhaust system can be had for $650 Ansa cheapest... at
http://www.buymbparts.com/

I would have to say no... it is not a good deal when you are giving away
$780.