In every 10 or so instance launches, I see cases where the EC2 plugin opens a SSH connection to the new instance before the time where I believe the corresponding private key has been put in place by the AWS infrastructure during the launch of the instance. As a result, we see errors in the node launch. The output for the launch is below.

just before slave CentOS (i-f295e51b) gets launched ...
executing pre-launch scripts ...
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is still pending/launching, waiting 5s
Node CentOS (i-f295e51b)(i-f295e51b) is ready
Connecting to 10.240.1.146 on port 22, with timeout 10000.
Failed to connect via ssh: The kexTimeout (10000 ms) expired.
Waiting for SSH to come up. Sleeping 5.
Connecting to 10.240.1.146 on port 22, with timeout 10000.
Failed to connect via ssh: The kexTimeout (10000 ms) expired.
Waiting for SSH to come up. Sleeping 5.
Connecting to 10.240.1.146 on port 22, with timeout 10000.
Failed to connect via ssh: The kexTimeout (10000 ms) expired.
Waiting for SSH to come up. Sleeping 5.
Connecting to 10.240.1.146 on port 22, with timeout 10000.
Connected via SSH.
bootstrap()
Getting keypair...
Using key: jenkins
dc:xx:xx:xx
----BEGIN RSA PRIVATE KEY----
MIIEow<private key info>
Authenticating as centos
Authentication failed. Trying again...
Authenticating as centos
Authentication failed. Trying again...
Authenticating as centos
Authentication failed. Trying again...
Authenticating as centos
Authentication failed. Trying again...
Authenticating as centos
Authentication failed. Trying again...
Authenticating as centos
ERROR: Publickey authentication failed.
java.io.IOException: Publickey authentication failed.
at com.trilead.ssh2.auth.AuthenticationManager.authenticatePublicKey(AuthenticationManager.java:315)
at com.trilead.ssh2.Connection.authenticateWithPublicKey(Connection.java:467)
at hudson.plugins.ec2.ssh.EC2UnixLauncher.bootstrap(EC2UnixLauncher.java:260)
at hudson.plugins.ec2.ssh.EC2UnixLauncher.launch(EC2UnixLauncher.java:91)
at hudson.plugins.ec2.EC2ComputerLauncher.launch(EC2ComputerLauncher.java:107)
at hudson.slaves.SlaveComputer$1.call(SlaveComputer.java:238)
at jenkins.util.ContextResettingExecutorService$2.call(ContextResettingExecutorService.java:46)
at java.util.concurrent.FutureTask.run(FutureTask.java:266)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1142)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:617)
at java.lang.Thread.run(Thread.java:745)
Caused by: java.io.IOException: The connection is closed.
at com.trilead.ssh2.auth.AuthenticationManager.deQueue(AuthenticationManager.java:63)
at com.trilead.ssh2.auth.AuthenticationManager.getNextMessage(AuthenticationManager.java:86)
at com.trilead.ssh2.auth.AuthenticationManager.authenticatePublicKey(AuthenticationManager.java:290)
... 10 more
Caused by: java.io.IOException: Peer sent DISCONNECT message (reason code 2): Too many authentication failures for centos
at com.trilead.ssh2.transport.TransportManager.receiveLoop(TransportManager.java:766)
at com.trilead.ssh2.transport.TransportManager$1.run(TransportManager.java:489)
... 1 more