If you want a list of what to "look out for" drop me a pm with your email addy - i recently wrote a check list for a friend who is also looking.
but to answer your questions briefly.
high mileage? no such thing correctly looked after they will go on forever - hoardes of German taxi drivers can't be wrong
Our 1989 W124 has done 214,000 miles and there is a W124 estate being used by our local cab firm with 530,000 miles on it!!!
Servicing costs - dealers = expensive but there are plenty of independents offering a cheaper alternative. Worth noting is that the dealers will give discount on both labour and parts to drivers of "older" cars.
Are the automatics reliable - yes they are - the W124 box seems to have a minimum life expectancy of 150,000 miles.
fuel consumption will obviously vary on how you drive - expect anything from 25 mpg for lead footed town driving to 35 mpg at motorway speeds.
I wouldn't worry about 20k miles here or there as long as the car has a full service history.
So, what to look out for
Back axle.....
1, the rear hydraulic suspension needs checking over - the accumulator spheres have a "life" of 100,000 miles and can be a pain to replace
http://mbclub.co.uk/forums/showthread.php?s=&threadid=3256
2, check the rear suspension linkages for any play - Mercedes have issued an upgraded replacement part for the top arm as the earlier bushes were weak
3, check the diff for any free play and for leaks - drive shaft ones are easy and cheap to replace the prop shaft seal isn't and requires specialist tools
Front axle and steering.
1, check for free play in the steering - up to 2" free play at the wheel is classed as "within spec" - obviously less is best
2, steering damper - expect them to last 65k miles - if it's leaking it needs replacing
3, check the brakes work properly with no juddering (warped disks is ot uncommon) and that the abs works properly - check the light on the dash is working properly - it comes on with the ignition key and goes off with all the other warning lights. Front brake squeal or whining is not uncommon as disks start to wear
Electrics
1, make sure everything works, sunroofs are prone to abuse and can fail - fixing them is not a DIY job
2, central locking, comfort locking and auto closing make sure everything works as it should
Interior
Make sure all the seats fold as they should (the back ones can stick if left unused for a long time)
Hope that helps - as I said, drop me a line for a more comprehensive list of checks.
If you have any doubts, get the car inspected or take someone along with you, try asking here for anyone local to you to come along with you.
Andy