I've used this trick to forward to a Twisted Conch daemon running as a non-root user. However, I would never consider this approach for load balancing.

Why would you never consider it for load balancing?

Because first of all it's just a variation of round-robin, which doesn't take into account that different requests will take varying amounts of time.

Secondly, you can't (in an easy way) remove or add to the pool of backends.

I'm confident others will come up with more not-so-compelling reasons for using iptables for load balancing.

It's probably more common to start a service as root, bind to a port, and drop privileges.