I thought P67 was a full "manual" landing?
It's billed as such, especially since the ROD switch operated as a direct throttle setting control in that program. Someone will have to verify what mode the DAP was in, as opposed to either Auto or Att Hold for P66. P67 was removed starting with Apollo 13. It's important to realize the AGC was not out of the loop in P67 because, obviously, we're referring to an AGC program.
In P66, the ROD switch selects the descent rate. In P67 it selects the throttle setting in discrete intervals. Each still involves the computer, because at its heart the ROD switch is just a switch with two affirmative outputs: up, or down. How the two bits representing that input are interpreted is still a matter of software. In P66, the up-bit, if newly set, is interpreted by the software as adjusting the set-point delta-h to be 0.5 foot per second slower than its current setting. That value in turn is used in a software control law, along with other parameters, to derive a control output that represents a change in throttle setting. The control law suddenly sees an "error" between the desired sink rate and the deduced sink rate. It has to increase thrust in order to slow the sink rate, then decrease thrust again to maintain a steady descent once the desired sink rate is achieved.
In P67, a newly set up-bit bypasses the control law and simply adds a fixed incremental value to the register in the AGC that represents the throttle setting. The reason this was initially contemplated is that it's very hard for something to go wrong with that logic in the computer, presuming the computer hardware is minimally functional. An alternate implementation could conceivably bypass the computer altogether and connect the switch directly to the pintle position servo on the DPS, using appropriate electronics. But in reality, if the AGC became entirely inoperative, the only real remedy was the Abort button, allowing AGS to take over and disabling PGNS completely.
In contrast, the joysticks on both spacecraft had a hardover mode. Normally the position of the joystick was just a digital value given to the computer. That is, it required a computer to interpret that digital value in terms of what mode the software was told to obey. There's no one right way. If I move the joystick to the right, it's clear that means some variant of "roll to the right." But one of the possible questions is what happens when I let go and the joystick springs back to the detent? Does that mean I've achieved the desired roll rate, or the desired roll attitude? In case something goes wrong with the logic that lets that question be answered in whatever way the pilot selects, moving the joystick all the way to the right clicks the hardover switch on that extreme, and that's connected directly, electrically, to the wires that control the solenoid valves on the roll-specific RCS jets. Unless something is very wrong with the spacecraft, it would be hard for that method of control to become inoperative. Now it would be quite hard to fly the LM in that mode, but it could be done.
One of the questions ka9q and I are debating is the notion of flyability in the face of computer failure. One theory of responding to an exigent crisis is to take whatever action leads you to the most achievable stable state. What exactly that state looks like depends on what point of your mission you're in. The space shuttle had an abort-to-orbit mode during the ascent. This is because ascent is not a stable state. Some degree of control must be actively maintained in order to avoid catastrophe. Orbit is a stable state -- even a slapdash orbit. It can be maintained for some time simply by passive physics. The point is to achieve a state in which diagnosis and contemplation have time to occur, without constantly having to address exigencies. Similarly Apollo 13 had an exigent life-support crisis; a stable state had to be achieved first before moving on.
The 120x alarms occurred early in the descent. In the face of dire failure then, the most readily achievable stable state is a return to lunar orbit. Not so later in the flight, where aborts become more dodgy. If the LM remained minimally flyable (compare Apollo 10), it may have been a more stable situation to fly to a landing -- any landing. Sitting comfortably on the lunar surface is a stable state.