I believe this will be fixed in the next builds. Anything 20100918 or greater.
To test, just launch instance, ssh in, wget kernel other than the one you have
(or, identical to the one you have, but this bug was only found if it was
different), and dpkg -i <kernel>.deb
** Changed in: cloud-init (Ubuntu)
Status: Confirmed => Fix Committed
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annoying prompt from legacy-grub-ec2 on kernel installation
https://bugs.launchpad.net/bugs/640685
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