These people -- http://4x4labs.com/diesel.html -- keep saying that they are putting a kit together to swap a Mercedes diesel into a Toyota. They seem to have run into some problems though and things keep getting pushed back.

If I understand correctly, the problem is that all of the Mercedes with the engine they are using (a five cylinder) were imported with automatics and the associated torque converter and there are problems putting together a properly balanced flywheel for a manual transmission.

The other problem is that the Mercedes engine that they are using was phased out in '86 (or maybe '87), which would be a possible problem if you are in a state that requires you to use a same year or newer engine than the one you are replacing.