>>> is the database synced automatically because both servers will be using the same s3 bucket to pull its data from ?
Currently, ClouSE requires each MySQL server to work with unique cloud storage location. Locations could be in the same bucket, but in that case they must have different prefixes, e.g. one server would work with s3.amazonaws.com/mybucket/db0 and another server would work with s3.amazonaws.com/mybucket/db1
>>> if not how do i set this up to run on multiple load balanced apache/mysql servers?
You can start with the ready-to-run WordPress-on-S3 AMI and split it into frontend(s) and a backend. On the backend you'd keep MySQL+ClouSE and on the frontend(s) you'd keep WordPress+WP2Cloud. WP2Cloud makes the frontend stateless (that's yet another advantage of storing media in S3 -- in addition to leveraging S3's high durability and scalability), so you can run as many frontends as you need to accommodate the load.
I think you can even use Amazon Beanstalk to do the heavy lifting of provisioning, scaling and balancing of WP2Cloud-enabled WordPress frontends.
>>> can i run it on amazon rds mysql and connect to it from multiple app servers?
AFAIK, RDS folks won't let you run a custom engine on their MySQL servers. That said, feel free to ask them. On our side, we'd be happy to offer ClouSE as part of RDS' MySQL stack.