You should bear in mind that the LOC is accurate for up to 18 NM
only and the GS in some cases only 10 NM. So if you stay in LNAV
and then change to VOR/LOC or APP closer then 18 NM you will
have a more accurate track guidance and the AP is not chasing
the beam signal to full deflection on both sides. If he still does it
close the Avionics are not accurate enough and mainenance has
to look after the Bird. Remember the NG uses GPS for position
update and is more accurate then the B737-300 to 500.
NG