Two's in - great post.
HC -
I am of course not against practicing manual flying skills to retain some degree of competency.
That depends on how you want to define the level of competency and what tasks you expect that competency to cover.
In the offshore world it may simply be to fly a manual ILS to recover to base - in other areas of heli aviation the manual competencies may be many and varied.
Try using automation to get a winchman onto a pitching fishing vessel in the dark and see how much use it is! Even the rad-alt hold might not be good enough to give the precision required.
I have been lucky to fly and teach the whole gamut of general handling exercises on every type I have converted to and spent much of my life assessing and honing the pure handling skills of many pilots as well as their use and monitoring of AP systems - both are vital skills and equally perishable.
Let's not pretend that we don't need to be able to fly the aircraft.