In order to address your question we need to understand whether you need volume or response, but it is difficult to get both at the same time.
Layer 7 load balancing - is data based application level balancing, so the data content of the network packet needs to be routed to an end-point. You can achieve volume (more users) by implementing routing at the application level, service level or kernel level.
Scalability - I assume you are running out of memory, CPU resources and network bandwidth.
Application level - your application logic receives an application packet and routes accordingly.
Service level - your system framework (front end service of some kind) receives the packet and through a module - performs the routing (think of custom apache module, even network driver modules - like writing a network filter)
Kernel level - Performs routing at network packet level.
The closer you move to the metal, the better your response will be. I suggest using dedicated linux server up-front to perform the routing - go native, not virtual. Use multiple or teamed network adapters for the WAN and a dedicated adapter for each end-point (one+ wan, one each for each connected app server)
If response time is important then you need a kernel/supervisor state solution, it will save you a few context switches but be aware that you need to limit hops at all costs and could better be served by fewer, larger machines and your scalability will always be limited. There is a risk in using KTCPVS, it is quite old and not actively updated. If you judge that it works for you great, otherwise consider writing something akin to a network filter as long as it runs in system state.
If volume is important but response time is secondary, implement a custom built high-speed socket switch built in C++ running in problem/user state. It is the easiest to maintain and will offer the best scalability.
You will need to build some prototypes to figure out what suits your needs best.
Final thoughts -
Before doing any of the above first ensure that you have optimized your game design. You may know most of this, I list it here for the benefit of all.
(a) messages should fit comfortably within one network packet, less than 1500 bytes for most home routers
(b) Try to fit the logic of the routing in your game client instead of your servers. A simple download of a small table with zones and IP addresses to a client will allow you to forego all of the above.
(c) Try to limit zone visibility by to the clients, they should know about their zones and adjacent zones only (if you implement the point b above)
Hope this helps, sorry I cannot be more specific regarding KTCPVS.