The question was about B737-3 not NG.
The SOP when I flew the 737-3 for my company read that PNF called "Flaps up lights out" the PF called for AP 1 or 2. However the limitations stated that the minimum height for AP engagement was 1000' agl.
I had this very debate with a training captain years ago. They argued follow SOP. I argued that airmanship sometimes dictates otherwise as long as you remain within the limitations.
Of course Airmanship is a very old fashioned word these days and has been superceded by the likes of CRM, Facilitation, etc.