IMU realignments using the sextant were done regularly, by all Apollo missions. Using the sextant for a position update was also done by most missions, or at least it was practiced for the case of loss-of-communication with the ground. Then the sextant and onboard computer were needed to for navigation to get the astronauts home.
There were two separate programs in the Command Module Computer for this type of position update. Program 22 (Orbital Navigation) and Program 23 (Cislunar Navigation). P22 in low lunar and Earth orbit did not involve any of the navigation stars. Instead you would point the sextant at a predetermined landmark with known latitude and longitude and take five marks on it at short time intervals. This was practiced successfully during the Earth orbital missions Apollo 7 (see the Mission Report page 5-95) and Apollo 9. The same method could be used in lunar orbit, either for updating the position of the spacecraft in the computer or to calculate the coordinates of a landmark on the lunar surface. This second method was used for the lunar landing missions to get more accurate coordinates of the landing site, before and after the actual landing.
The other Program, P23, is the one that uses the position update method you were describing, pointing the sextant at a star and a position on Earth. This program actually had a few different modes: Earth horizon, Earth landmark, Lunar horizon, Lunar landmark. So you could give the computer coordinates of a known landmark on Earth or Moon or you could also use the horizon closest to the navigation star. This last method is the one that was used the most, usually a few hours after TLI, while still close to the Earth. For example, Apollo 11 Flight Plan, page 3-7.
Program 23 best works during the mission phase a few hours after TLI or TEI and a few hours before LOI or reentry. And that's when Apollo 8 practiced these procedures. Later missions like Apollo 11 only tested P23s in the hours after TLI.
Now, Program 23 was also attempted in Earth orbit by Apollo 7. But it didn't work very well. Here the quote from the Mission Report, page 5-98:
Midcourse navigation/star horizon/landmark.- A number of star/earth horizon measurements were scheduled, but all attempts to perform these sightings were unsuccessful. This failure resulted partially from the difficulty of the control task at the relatively high earth-orbital rates, but primarily from the crew's inability to define a horizon locator, which was the primary purpose of these tests. The dichroic filter in the sextant landmark line-of-sight did not aid in land/sea definition and actually smoothed out the horizon such that it was impossible at earth orbital ranges to define a locator for repeatable sightings. The crew stated that at longer ranges, the sightings should be accomplished with ease. The capability for performing star/lunar landmark sighting was demonstrated using the star Alphard and lunar landmark 5 (crater Diophantus).