FoxRomeo ,
Well, first of all we did not have autothrottles on the B727 with CAT III HUD, thus I assume it is not required.
Secondly, the impracticality of a CAT II/III system very rapidly turns into a question of money.
Finally, the HUD does not substitute any systems, it is a complex add-on wich may be cheaper than a CAT II/III certified autopilot, but probably only if such an autopilot does not exist for the type in question.