Hello,
The 7 layer model is in reference to the ISO layers. The Internet model actually uses only 5 layers. Layer 5 combines layers 5, 6, and 7 of ISO layers. If you look at a network capture of an HTTP packet for example, you will see the layer 2 data link header, the layer 3 network header (IP), the layer 4 transport header (ie. UDP or TCP), then the layer 5 header which will be the HTTP header, etc. The numbers 5 and 7 are often used interchangeably.
If you are familiar with our CSS (Content Services Switch), we actually call the content rules doing application processing 'layer 5 content rules'.
So, to answer your question, the ACE can currently do L7 processing (or L5 if you want to call it that) for some protocols, but not all. In version 2.0 of the ACE, due out this quarter, we will support generic protocol parsing, which will allow you to process any layer 5/7 data.
Regards,
Sean