Obviously the jack point looks bad and the structure has been compromised, especially since it dropped and shifted outward. I don’t think you could of prevented this issue if it started years ago as it might have been rusting from within the structure and you may never have detected it until it was too late. As sentimental as your car is to you, don’t be beat yourself up on this. It can be fixed.
It would seem that you will need a rocker panel from a donor vehicle to grafted on.
Contact forum member bob_98sr5. He could have some insight and advice on how to proceed since he himself has done some major surgery to his own rusted ’87 300D. You can take that advice to the body shop you choose to have the repairs done.... Or possibly attempt to do the repair yourself if your confident enough.
But here are some links to his blog and some pictures of his repair on his car from his site.
http://biodieselbob.blogspot.com/2007_09_01_archive.html
http://biodieselbob.blogspot.com/2007_11_01_archive.html
http://biodieselbob.blogspot.com/2007_12_01_archive.html
http://biodieselbob.blogspot.com/2008_01_01_archive.html
Best Wishes for Bodhi.
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