CloudFront acts as a caching layer, for each edge location. If the content is not available at the edge location, it connects to EC2, retrieves the data and passes it on. So as far as I know, if using CloudFront, you shouldn't need such a large EC2 instance.
I've tested this extensively with static resources, I didn't need it for live streaming yet, but the same principles should apply.
This post on the AWS website from 2012 seems to confirm my hypothesis: http://aws.amazon.com/about-aws/whats-new/2012/03/29/amazon-cloudfront-improves-live-streaming-support-with-adobe-fms/
So basically, as long as the EC2 instance is strong enough to stream to all CloudFront edge location simultaneously, you should be fine.