The difference on paper is pretty large. The Infiniti M35h makes 302 horsepower and 258 pound-feet of torque from its naturally aspirated 3.5 liter V6. This is combined with an electric motor though for a boost of 58 horsepower to 360. This is a rather large advantage over the E350 Bluetec with only 210 horses but packing 400 pound-feet of torque. The thing is, the electric motor provides instant torque in the M35h so it is not exactly hurting in that department.
The results are very one sided. Both vehicles weigh about the same (the Benz at 4242 is 79 pounds heavier than the hybrid) but the Infiniti M35h runs the 1/4 mile in email@example.com versus firstname.lastname@example.org for the E350 Bluetec. This 3.0 liter diesel motor clearly isn't the best diesel the Germans have to offer.
To make matters worse the M35h also managed the exact same gas mileage as the E350 Bluetec at 24.4 MPG. The hybrid provided a sound thumping and it is hard to fault it here. No surprise Edmunds picked the Infiniti decisively over the E350.
Mercedes E350 Bluetec: