They could probably have solved this by scaling out, but I'm not going to fault their diagnosis or response.
Don't spawn off heavy requests without a throttle / queue, or else you will overload your single core.
We normally don't think about this because most requests are just tiny queries / small http requests.
I think a lot of people forget this sometimes and just spawn off unlimited multiple simultaneous requests in Node apps. Doesnt matter what language you're using, that's never going to turn out well
Just want to add that EC2 instances aren't exactly cheap either when it comes down to it. I'm sure budgets are tight at Digg. Far better to first try to solve the problem with refactoring than throwing more hardware at it.