Hi Greg,
One thing I noticed is that !Keydown sustainBy: !cc64 should be in the Gate of the sequencer (as you have it), but it is not needed in the Gate of the ADSR.
Another contributing factor is that the ReleaseTime has !KeyVelocity added to it, and since the sequencer is sending 1 as the velocities, the release time is quite long, especially in relation to the duty cycle at your BPM rate of > 300. By multiplying the release time by !Legato instead, you already get much closer to the expected behavior.
Here's a variation that I suspect gets even closer to the behavior you expect by applying an AR to the ADSR to ensure that there is always an attack/release, even when voice-stealing at this rapid BPM rate.
http://kyma.symbolicsound.com/qa/?qa=blob&qa_blobid=7120549136289975086
(Sorry it took a few days to respond to your question; most of the activity has migrated to the Kyma Discord Community these days so we don't check here as often anymore).