[Paleo Conservative]

Why not just use some old 727s or 737s retired from airline service?

For the same reason they aren't still flying on 727s and 737s. They are much less efficient than new engines and require lots of maintenance. It would be better to lease new engines bundled with maintenance contracts if the DOD can't find the cash to buy them.

[Paleo Conservative]

Also instead of eight engines Boeing could install four engines. The efficiency improvements would pay for re-engining, because fewer tankers would need to fly to refuel them.