I want to drain, inspect and change the rear diff oil. I need a recommendation for which gear oil to use.

TIA

I like synthetic lube, myself. As Rhys says, a 80-90w lube that meets the GL 5 spec is great. A new gasket will obviously be in order as well. Any care and feeding of those diffs is appreciated by them, I'm sure. The wagons, with their 4.56 gears, are especially prone to howling and wear. They also have typically lead a tougher life by being stuffed to the gills than the 130s or 4-doors.

Can I just make my own gasket with some of that thick paper gasket material they sell at the local flaps?

Yes.
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67 144, 86 740T, 91 945SE, BMW R69S, R60/2

Ye olde ball peen hammer strikes again...An arch punch set is handy, but not mandatory for this process. Maybe you have a set or knows someone who does. If you order a gasket up, I think they are about $6.00, plus shipping, of course.

So my standard exacto knife method isn't good enough? Has served me well many times before.

Your exacto knife method will work just fine. I was just letting you know my favorite tools when I'm punching gaskets.

Just skip the gasket and put a tube into the fill hole and suck the old fluid out. Thats what I do.

"I want to drain, inspect, and change"...I don't think there's too much chance of inspecting the condition of the gears if you don't have the cover off, unless maybe using a borescope is an option. Just my $.02

GL-5 80W-90 hypoid oil.