Originally Posted by knc1
If ssh is still not working for you, we need to figure out how to get dropbear to look for the public key(s) under /tmp/* rather than under ~/.ssh
made me think that you didn't get that ~ actually is
I personally think that it's actually a wiser choice (from Amazon's perspective) to put the root home directory under /tmp/ than to make it persistent. This way, even if something inadvertently shoots itself in the foot, at least such settings are cleared after a reboot. (Though I don't know which kind of setting would qualify here).