Everything that has been asked in this thread can be achieved with GF with quiescing. Please go through the entire doc link I sent. Failing that, this subsection from that page:
http://docs.sun.com/app/docs/doc/820-4341/abdgs?a=view
is "Upgrading In a Single Cluster" and deals with exactly what you want to achieve and provides every step for no downtime upgrades in 1 cluster with multiple instances.
Additional answers for the thread:
Yes, instance B continues to serve requests while instance A is being quiesced.
Yes, you are deploying AppVersion2 to the cluster containing Instances 1 & 2. You disable dynamic reconfiguration according to step 2 to manually determine when updates are pushed to the instances.
Steps are provided for the GF LB. If you are not using it, you need to substitute the appropriate steps for your LB.
You do not need multiple clusters to achieve this.
You can achieve a rolling upgrade.
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