It sounds like you and your wife need a heart to heart discussion. For all you know, maybe she was just having fun fantasizing about owning a Mercedes. Dunno?
When I just out of school, I had a Mercury Tracer that was 9 years old and $190k miles on the odometer. That didn't stop me from subscribing to various car magazines, browsing the Sunday ads, or visiting manufacturers websites. I knew I couldn't afford a new car, let alone a luxury, at that time, but I dreamed about the day I would be able to.
If she is mulling over the idea of ditching the Expedition, wow!, what a contradiction on her part. Your logic about offsetting the additional cost to fuel the truck is flawed because you are forgetting about the additional cost to acquire a new M-series SUV. Last I saw, they starts about $40,000.
Good luck man, sounds like you'll need it!