The two failure modes are:
1) The top hose nipple can crack and break off. You will usually see plenty of warning if you actually inspect the valve, with a build up of coolant crust.
2) No heat or suboptimal heat
For #1, zero symptoms.
For #2, MAYBE starting to show signs? It seems like the heat takes a while to "get going" but I don't have another car to compare to so it's kind of guesswork.
I decided to preemptively replace it because it was $60 on FCP Euro for OEM and it will be something I don't need to worry about for a long time. This is something that the PO of my E55 said his 09 S550 did require so I guess that was also on my mind. It's a common issue. Can't break if I replace it first!
So is it awful to get to? No, I expected this to be absolutely buried. You know how on other cars with simple jobs that suck, the explanation is "the car was designed to be manufactured, not repaired, a design change to make it easier to repair would drive up the cost." Well....I'm dealing with an S-class here so, is that where some of the cost goes? Not sure.
All you do is peel away the weather strip and lift out this steel rear engine bay panel. No tools required. No removing the cowl or wipers or any nonsense. Well I did also remove the engine cover/air intake thing but that also doesn't require tools.
Time to removal by EXIF: 22 minutes. It's 4 hose clamps and an electrical plug. I did need to use my cable hose clamp remover tool that I bought for STS work as well as my brand new hose pliers to help but these are fairly standard tools (at least for mechanics).
Installed! Time: 12 minutes
There is now air in the heater core and stuff so I am forced to do my coolant change with vacuum fill but I'm sure the car would drive even with a little air if really necessary.