"most of Boeing's airliner work prior to the advent of the 747 was subsidized by the USAF"
What was the 727 developed in parallel with for the USAF?
No. I don't think that either the 727 or 737 had a military analog during development (but I don't think either plane preceded the 747 by that many years, either).
Saw a program on the 727 a while back. THAT was one great piece of aerodynamic design for the period. The airlines put a whole lot of requirements on that project that required some innovative design work.