I think that there are several reasons that companies like Mercedes or a performance or restoration company do modifications like this. The spark usually would have come from some enthusiastic engineer or mechanic who spent his own time and passion on improving an existing design. If he was lucky he got factory support and if he was successful he might even get factory backing for his project and if it it is commercially promising as well, then it might end up in a production run.
In my case, the primary reason for my Pagoda 3 liter M130E was because I am a real car nut, especially when it comes to the Pagoda and I always like to have more power on almost any car. I even think that an Amphicar doing 7mph on the water deserves better than that :-).... Second, I'm an engineer and I just wanted to see how much I could improve performance at a reasonable cost and effort and third, I thought there might be others out there for whom I could do this engine upgrade, although I didn't imagine there would be that many, considering that the Mercedes crowd is generally geared a little more towards originality, than for instance the BMW guys who are into performance upgrades. I think the same goes for factory projects like this and I'd like to think that if I had worked for MB during the Pagoda years (I used to actually work at the BMW factory motorcycle division), they might have kept the Pgoda around until 1975 as the 300SL. I would have drawn the line at putting huge extruded aluminum 5 mph bumpers on the Pagoda in 1975 though ;-)....
