That has definite security implications. How do folks mitigate this implication in practice?
If you're collecting stuff like credit card numbers, social security numbers, HIPAA patient information, etc., you can't.
If you're collecting somewhat sensitive but not necessarily legally protected stuff (first/last name, birthdays, etc.) you can fairly safely assume the data's going to be reasonably safe in transit, but there aren't really any mitigation steps you can take. It's a question of how much risk you're willing to accept.
If alternatively, I set up https traffic between load balancer and the application servers also, what are the performance implications?
If EBS terminates your SSL, they handle the performance implications at no cost to you. If your servers have to handle SSL, it's going to have some performance implication, but these days it's fairly minimal.
Ultimately, if your data is at all sensitive, you're probably best keeping it encrypted for the entire path to your backend servers. The downsides are minimal and the upside is a big one - secure transmission of private information.
