Re-building by reading logs out from S3 can be very slow. It should be seen as a last ditch effort. Not really a hot swap, or fail over solution (depending on data size obviously).

If you can't use any persistent storage, then these machines become pure processing nodes. Which in this case, I feel like it would be better to not design your system with EC2 at all. :-(

To me having EBS made EC2 a very powerful solution compared with their competitors. Not having durable and consistent EBS otherwise makes no point in differentiation and serves purely as non-functional fluff we end up paying extra for.