I suspect the C17 does have good accurate inertial sensors, along with a terrain-mapping radar system in the nose. Maybe not like the F-111 for nap-of-the-earth attack runs, but good enough for transport duty.
If we ARE going to explore automated flight, the military seems like a good place to start. It’s already a high risk environment, and they have experience with experimental operations. Most of our air navigation procedures (starting with NDB approaches, and even IFR flying itself) came out of military missions.