this suitably worked around in lp:~ubuntu-on-ec2/ubuntu-on-ec2/cloud-utils .
Tomorrow I will spend some time trying to fix the underlying issue in euca2ools.
** Changed in: cloud-utils (Ubuntu)
Status: In Progress => Fix Committed
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Lucid UEC image 20100215 unable to start on UEC
https://bugs.launchpad.net/bugs/522292
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