In order for GCP to import ssh key's on 1.2.1 image the ssh and ssh-import-id modules need to be loaded. This does not allow GCE to create new users, but it will allow GCE to import SSH keys for users created on the instance. This is required to access newly created GCE instances otherwise an authorized key cannot be set for the vyos user.
Required cloud-init modules for function :
cloud_init_modules: - ssh # The modules that run in the 'config' stage cloud_config_modules: - vyos - ssh-import-id # The modules that run in the 'final' stage cloud_final_modules: - runcmd
Note that this only works if cloud-init is restarted after VyOS has loaded as VyOS overwrites the authorized keys when it parses the configuration file. The only two options here would be to have it read the seeded keys into the config file or we don't use the GCP method of pushing SSH keys and instead seed the standard vyos password in the default configuration.