In this paper, a channel allocation scheme is studied for overlay wireless networks to optimize connection-level QoS. The contributions of our work are threefold. First, a channel allocation strategy using both horizontal channel borrowing and vertical traffic overflowing (HCB-VTO) is presented and analyzed. When all the channels in a given macro-cell are used, high-mobility real-time handoff requests can borrow channels from adjacent homogeneous cells. In case that the borrowing requests fail, handoff requests may also be overflowed to heterogeneous cells, if possible. Second, high-mobility real-time service is prioritized by allowing it to pre-empt channels currently used by other services. And third, to meet the high QoS requirements of some services and increase the utilization of radio resources, certain services can be transformed between real-time services and non-real-time services as necessary. Simulation results demonstrate that the proposed schemes can improve system performance.