It seems that it is possible to host a Tor Hidden Service (like an Onion website) in Amazon EC2, but is it feasible to do so? Is Tor allowed to run in Amazon network service?
Assuming I use Ubuntu Linux hosting
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I believe that it is possible to run a Tor Hidden Service in an EC2 instance. However their terms of service prohibit exit nodes from being run. Some people run bridges or relays in EC2 and that seems to work and has not been removed. I think that as long as you are not hosting anything even conceivably illegal Amazon will continue to take your money. Keep in mind that nothing that needs to be secure or private should be run on EC2.
A friend of mine was running a exit node from an EC2 instance but it got shutdown about after a month. The shutdown was mainly because the server was pulling some shady shenanigans e.g. port scanning which apparently is frown upon by the good folks over at AWS. Check http://torstatus.blutmagie.de/ and if you look closely there are a few exit nodes run on EC2.
Edit/Addendum: You might also to the excellent post at https://blog.torproject.org/running-exit-node for more info.