Can Dexron-III replace Dexron-II

Yes.

Dexron III/Mercon automotive Transmission Fluid (ATF) is generally recommended as a replacement fluid for automatic transmissions meeting original equipment manufacturers (O.E.M.) performance requirements for current General Motors, Ford, other domestic and imported passenger cars, vans and light trucks where DEXRON II, DEXRON II-E, DEXRON III, AND Ford/MERCON fluids are specified.