You can do KML to Layer for instance, but I think it's a snapshot. I believe it doesn't honor the Dynamic nature of the KML Network. You can also use the AGS Manager to publish a KMZ Network link. (which is what I did)
I also loaded the KML in Arcmap (KML to Layer), and it is very slow(large). Someone smarter than me may have a better idea.
btw, I did get <Region> to work in the KML file, but unfortunately, once you hit the set spatial box, it loads the entire feed, not the singular Region I hoped for. So if the size is indeed the problem, this will not fix it. Works great in Google Earth 😞