I bought an SL500 that basically had the panorama top permanently bolted on, so the soft top was stowed for years in the folded position. As a result, it's wrinkled and distorts my view out the back.

Is there a way to smooth out the window? Can I iron it by having someone hold a towel-covered piece of plywood on the inside while I iron through a towel on the outside? Or will the heat damage the window?

Warm air gun, was my equipment of choice. Time was the other element. ( days not hours )
IS the plastic still clear? has any of the edges "yellowed" or turned brownish?
I have replaced the back window material in several Benz SL's. I like the new, clean and flexible of the replaced material. Now, I never open the soft top in cold temps!!! That cracking sound is not music to my ears

Thanks. It's been closed for about a month and is still a little wrinkly. The plastic is still clear with no yellowing but there is a little abraded damage in a small spot.

I live in California so I don't have any cold weather to open the soft top in.

Great! I am in Broken Overshoe, Kansas where men are men and weather is extreme!
With that rant over, it sounds like you are in great shape. I use a bath towel, ( rolled lengthwise ) as a filler in the center of the plastic window. My belief is that soft material between the folded plastic provides a space and soft buffer to limit the vibrations of the road from effecting the plastic.
Since you live in a great weather environment, in Kansas when we are surprised by rain the towel after the top is up can wipe off car and body parts.

Haha, I never get surprised by the rain here. It rains in December and January and during those months I have the top up, there's no chance of rain outside those months. I'll put the towel in the back like you recommend, and try a warm air gun on the window.

Would a hair dryer do?

yes, and maybe safer from a too hot for the plastic comcept!

If you live in California as I do then all you need to do is put the soft top in the up position and let the sun warm the windows. I would be very careful using any artificial heat to smooth out the windows. I just had new plastic windows put in by an upholstery shop and it still took a couple of days before everything smoothed out to about 95%. Because they are plastic they will never be 100% smooth.