DURING CAT II LANDING OPERATIONS A B737 WAS ASSIGNED SEA RUNWAY 16L AT THE FAF WITH AN AIR CARRIER AIRCRAFT IN POSITION ON THAT RUNWAY. AT 1200 FT THE DEPARTING AIRCRAFT WAS CLEARED FOR TAKEOFF. AN ILS (GLIDE SLOPE) SIGNAL ANOMALY OCCURED.

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WE WERE ARRIVING IN SEA AND SET UP FOR AN AUTOLAND DURING CAT II OPERATIONS WITH THE RVR 1400. ATC WOULD NOT ASSIGN A RUNWAY TILL WE WERE WITH THE FINAL CONTROLLER AND AFTER PROMPTING THEY FINALLY ASSIGNED RWY 16L. ATIS WAS ADVERTISING ILS APPROACHES TO RWY 16L AND 16R WITH DEP OFF RWY 16C. AT THE FAF WE CONTACTED SEA TOWER AND THEY STATED THERE WOULD BE A JET 'IN POSITION AND HOLDING' ON OUR RWY AND WE WERE NOT CLEARED TO LAND. AT ABOUT 1200 MSL THE JET WAS CLEARED FOR TAKEOFF AND WE WERE CLEARED TO LAND. AFTER THE RWY SYMBOLOGY CAME INTO VIEW; AT 300 FT ABOVE THE TOUCHDOWN ZONE; THE HGS GUIDANCE CUE STATED JUMPING AROUND AS THE JET FLEW THROUGH THE ILS BEAM. WE BROKE OUT AT ABOUT 100 FT AND LANDED. HAVING AN ACFT HOLDING ON AN ACTIVE LANDING RWY DURING CAT III OPERATIONS WITH THE APPROACHING ACFT INSIDE OF THE FAF IS AN INVITATION FOR TROUBLE. THE POSSIBILITY OF BREAKING OUT WITH AN ACFT STILL ON THE RWY OR HAVING AN APPROACH WARN DUE TO THE INTERFERENCE CREATED BY THE DEPARTING ACFT AND MISSING THE APPROACH THUS CREATING A SEPARATION CLEARANCE PROBLEM WITH THE DEPARTING ACFT AND THE ONE ON MISSED APPROACH IS JUST TOO GREAT. THE THREE RWY CONCEPT IN SEA APPEARS TO BE A FLAWED SYSTEM AND INVITATION FOR TROUBLE. THERE NEEDS TO BE A CONSISTENCY WITH THE INSTRUCTION ATC ISSUES AND THE ATIS. RWY 16L SHOULD ONLY BE USED FOR TAKEOFF IF THERE IS A PERFORMANCE ISSUE NOT AN APPT TRYING TO SAVE A FEW SECONDS AND HAVING ATC ACCOMMODATING THEM. THERE NEEDS TO BE A CONSISTENCY WITH THE INSTRUCTION ATC ISSUES AND THE ATIS.