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We've experimented with a similar configuration at GoGuardian. We settled on:

  - Gzipping the subset of code that needs to be deployed
  - Uploading that tar to S3 and creating some infrastructure so that new instances pull the current from S3 on boot
  - Creating a fab script that ssh's into our instances and re-runs the on-boot script to point them to a new deploy version

That sounds like a pretty reasonable deploy process to me. Reasonably quick, and a much more straightforward way of getting instances going. I think their concerns about load spikes would be better handled by having an instance or two already spun up, so that additional load and/or crashed servers can be handled without needing a process that has more failure conditions.

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