I spent more time testing this particular issue. I believe that what appeared to be lost traffic is simply due to the shortened keepalives and the load balancer favoring keepalive connections over new connections. However, there still seems to be a link between gzip settings and the number of open connections (keepalives).

gzip on;
gzip_comp_level 1;
gzip_types text/javascript text/plain application/x-javascript;
gzip_disable "MSIE [1-6]\.(?!.*SV1)"
#gzip_buffers 64 4k;
#gzip_min_length 1100; #if it fits in one packet, no worries
#gzip_http_version 1.1;

I have confirmed that if any one of the three config lines at the bottom (the ones that are commented out) are present, the number of open connections drops from ~7600 to ~1300. Removing that line from the config and reloading restores normal operation. Strange.

Cheers,

Dean