"Can you use their queues and database tools w/o using EC2?"
Yes, you very easily can. RDS is a simple setup, and so is SQS (queuing). The same goes for Dynamo and Redshift.
Are you really going tolerate 10+ ms of latency between a database, and an app server? I have never personally tried it, but it seems like it would be a disaster.
I just tested pinging our public RDS instance (non-VPC) from one of our EC2 instances that is loading data ever 1-3 minutes from S3 objects into that RDS instance from within a VPC. 3-5ms ping times. More than acceptable.
It's not 10ms. Halfway through a staged AWS migration now and the latency has really not been an issue. This is from a London data centre to AWS Ireland.
At most it's been 4 to 6 ms. And that has coped with our heaviest load.
Really? That seems enormously too slow. Even over the internet, I'm within 5-10ms of most things in the bay area.
If you have a dozen slow (100us) switches, three slow (2ms) routers, and 500 kilometers of fibre (2ms), you should still be under 10ms each way. And that's enough gear to cross some countries.
I'm curious how you can do much worse than this in a data center. Maybe some pokey "application firewall" or massive buffer bloat?