Currently (12.04 and quantal at the moment) cloud-init creates a binary package called grub-legacy-ec2. The purpose of grub-legacy-ec2 is really to
* support use of pv-grub, a xen paravirtualied bootloader, which reads a grub 0.97 style /boot/grub/menu.lst file
* install along side of grub-pc. The Ubuntu cloud-images that run on xen are identical at the filesystem level to those that run on kvm. Having 2 images, or having the user need to install a specific package based on hypervisor is not desirable.
the grub-legacy-ec2 package basically represents a copy of grub (0.97)'s update-grub code and required dependencies. As that is the code that updates /boot/grub/menu.lst. It also includes some small bit of code to determine if a kernel is sufficient to run on EC2 (based on the fact that in the past some kernels did not run there).
So, this bug is a request to remove that function from cloud-init and either put it into the grub package instead.
Long term, this would be a better path as the maintenance of menu.lst does not really make sense in cloud-init, and debian has packaged cloud-init without the grub-legacy-ec2 code.
Also, note in debian bug http://