Comment 4 for bug 1841182

OK, it looks like /var/lib/cloud/data/set-hostname ends up empty after the reboot, which is what causes the issue. We should handle that case gracefully, assuming that it isn't cloud-init that's causing it to be removed.

To help confirm what's going on, are you able to capture /var/lib/cloud and logs post-failure (perhaps by attaching the root disk elsewhere)?