(FORTUNE Magazine) – It was hardly lust at first sight. Early photos of Mercedes-Benz's new sport-utility vehicle, the ML320, an M-Class, implied a cross between the sneakerish Toyota RAV4 and the blimpy bulk of a minivan--not exactly a body to pack your bags for. But the engineers behind the three-pointed star promised groundbreaking technology, impressive handling, off-road panache, and a ride as silky as one of the company's luxury sedans.

Mercedes needed to make the ML320 successful--it is perhaps the company's most significant attempt to attract a younger, less moneyed buyer. Needless to say, Mercedes took every precaution to enter the lucrative realm of 4x4s the right way: The project took four years, $300 million (and another $350 million in dealer facility upgrades), a million test miles spanning the continents, and a new plant in Tuscaloosa, Ala.

And then the final flourish: The German haute manufacturer announced a few weeks ago that the ML320 would list for $33,950. In other words, Mercedes comfort, safety, and reliability at a middle-of-the-pack price? Move over, Jeep Grand Cherokee. Take that, Land Rover Discovery. Heck, the analysts are even mentioning the ML320 in the same breath as the best-selling 4x4, the Ford Explorer. So I put aside my petty book-by-the-cover judgments and headed to the Colorado Rockies, the kind of terrain this five-passenger V-6 was constructed for.

The jaunty, ruby-red ML320 awaiting me at the Denver airport was surprisingly handsome, not to mention taller and more muscular than I had expected--hardly the chubby youngster from the brochures. Climbing into its gray leather-blanketed interior, I was surprised by the amount of space, from the cathedral-like headroom and wide front buckets to the roomy back bench and yawning cargo area (seven good-sized pieces of luggage--a week's a long time--tucked right in and didn't even stack above the seat line). And yet the ML320 is no bigger than your average midsized sport ute; its openness is a design-efficiency feat that proves biggest is not always best.

After buzzing to and fro with the eight-way power seat adjustments, I took off. Hey, wait a minute! This does drive like a smooth, well-built car, not like the trucks many of its competitors are based on. (Mercedes uses front and rear independent double-wishbone suspension, combined with a welded-steel box frame to take handling and comfort into a higher realm.) In fact, as I accelerated west toward the snowy peaks of Aspen, the ride was so quiet I found myself watching the tachometer to see just when shifts were occurring (of course, the Bose six-speaker sound system drowned out most of the engine purr). It seemed that this was a Mercedes through and through: The vehicle laid safety fears to rest and padded every road blemish to nothingness. I felt the stirrings of more serious emotions.

Ah, but every relationship has an occasional downside, however slight. As we climbed skyward from Denver's mile-high platform to Independence Pass's 12,095 feet, the ML320 began to strain against oxygen deprivation (to be fair, so did I). Although I was still able to push past other cars going 70 (the legal speed limit is 75), I suddenly had to hold pedal to metal and use the "manual" option--shifting the automatic transmission between second, third, and fourth--in order to wheeze up the inclines. We made it, but not without revving the engine well above the 4,000-rpm range for the entire ascent. Although almost any car would have the same reaction to altitude, I was nonetheless very pleased to hear that Mercedes is already looking into a V-8 version to be introduced next fall; mountain dwellers are advised to wait.

And then there was the unsettling matter of the ghost. It took my companion and me a good half-hour to figure out that the reason the back power windows kept scrolling down mid-highway was not because of some devilishly clever auto-climate system but because the control buttons were located precisely where our elbows leaned on the padded center armrest.

But enough hair-splitting. Over the course of a week, the ML320 outdid itself (and the competition). It scaled rocky, rutted ascents to trailheads with nary a scramble, and handled washboard dirt tracks and mud bogs with the same grace it displays on the road. Its agility is a result of lots of high-tech innovations that alone are worth the sticker price. For instance: The ML320 is the only sport ute to employ four-wheel traction control in conjunction with its full-time four-wheel drive (normally traction control is applied only to the two drive wheels); the competition still relies on an older technology, locking differentials, as a way to deliver grip to the wheels. A MENSA-level computer electronically detects slippage and applies brakes to the spinning wheel or wheels, which transfers torque to whichever remaining tires have grip. In plain English, that means you can be cruising along a logging trail, oblivious, when suddenly a tree root bounces you sideways into a mud puddle the size of Lake Erie. Even if three wheels get sucked in, the ML320 will arrest those and pour the power to the fourth wheel. No other vehicle can isolate down to one-wheel drive, so to speak. Just don't get all four in--no one's figured that out yet.

But this wasn't a hard-core off-road evaluation, this was a test of the Mercedes' more real-life possibilities. In other words, for a week I drove the ML320 from high mountain passes to grocery stores, from chichi restaurants (when in Rome ...) to whitewater-rafting put-ins. In each situation it fit in admirably, carried tons of gear, and was so easy to operate it felt like a comfy old shoe. The rear hatchback opened and closed with one arm. Unlike the back seats of the competition, the three-bucket back-seat bench effortlessly folded down in three configurations: one-third, two-thirds, or all the way, making it easy to carry odd-sized loads (like the members of the Vail rugby team we took rafting; don't ask). The dash and console area gave me just enough gadgets--an ambient-temperature gauge, seat warmers, a 12-volt plug for boat inflators, and some quintessential Mercedes wood grain. Given my tendency toward speed and high-performance vehicles, it was unsettling how at home I felt in this very home-oriented Mercedes.

One warning. Since the sport ute is hitting dealerships only as you read this, at least for now driving the ML320 is like using a cellular phone in public five years ago. People tend to gawk. Maybe it was a function of the late-summer crowd in Aspen, or the novelty factor, or maybe the obvious quality of the workmanship, but I could have made damn good money selling rides in it. A well-dressed Saab-driving couple begged to sit inside--they had already ordered an ML320 but had never experienced it in the flesh. A friend of mine happily ensconced in the kid-dog-cat-bike-kayak stage is ready to buy one, based solely on my reverent tone as I described its sturdiness, usefulness--and value.

By the end of my seven-day tryst with the ML320, a casual encounter had transformed into something profound. I saw the vehicle in its true light: a hybrid of characteristics that somehow add up to the 4x4 equivalent of the ideal mate. Although it will never be a true head-snapper, it is classy, classic, and (minus the rather enormous front-grille tristar badge) wholly understated. It will tirelessly protect you and tend to your needs. It will repeatedly wow you and your friends with its skills. It will never embarrass you in public. It will chauffeur you with the elegance and smoothness to which you should be accustomed. It will schlep all your sports equipment and wine cases and kids, and still fit into a normal-sized parking place.

It is, as they say, the real thing.

REPORTER ASSOCIATE Patty de Llosa