When kube-proxy for IPVS tried to use 127/8 for network traffic it went all kinds of bad. I realize that this doesn't make as wide ranging of a change, but 127/8 is hardcoded in a lot of different places. It is going to take a LONG time before all those devices are updated.
It seems kind of silly to undergo this endeavor, instead of adopting IPv6. We are simply staving off the inevitable with these extensions people keep proposing.