On , I learnt ...

How to convert SSH2 public keys to OpenSSH format

Turns out cloud-init requires public keys to be in the single-line OpenSSH format but I was passing keys in multi-line SSH2 format. /var/log/cloud-init.log was complaining that:

2021-03-25 15:31:55,032 - util.py[WARNING]: Failed loading yaml blob. Invalid format at line 22 column 1: "while scanning a simple key
  in "<unicode string>", line 22, column 1:
could not find expected ':'
  in "<unicode string>", line 23, column 1:
    3EBOn0CEF2/aGO4Ja+bE05PdhmzNc3Tn ...

To convert, use:

$ ssh-keygen -i -f ssh2.pub > openssh.pub

For the record, to convert the other way, use:

$ ssh-keygen -e -f openssh.pub > ssh2.pub