Apparently the stop/start feature of hybrids leads to some refinement issues on a diesel engine, but a review I read of the E300 Bluetec Hybrid says it is pretty seamless. Cost is a factor also. It must not be easy to do since no manufacturer outside of Mercedes and Puegot/Citroen makes one.
The problem with the E400 is the diesel is better. They should put the hybrid system on to the Diesel V6 or even the turbo 4 diesel if they really want to sky rocket the fuel economy. I know diesel-hybrid is a bit harder to do, but I remember reading that Mercedes has pretty much got it figured out.
Why would a diesel hybrid be harder to do?
The E400 isn't the car we want though, the better choice is the E300 bluetec hybrid because it has 224 hp and can still get the E-class from 0-60 in 7.5 seconds, but it gets a Prius beating 56 mpg.