After further evaluation, I've found a way to achieve my desired result. However, look at the code makes me think that it's not exactly intended...
What I've done:
destination_variable = private_ip_address
vpc_destination_variable = private_ip_address
destination_format = {0}@{1}
destination_format_tags = Name,private_ip_address
This lets me set the ansible_hostname (or maybe it's inventory_hostname) to the label I want (instance_name@ip). However, ansible_ssh_host is then set to that same label, which isn't the correct SSH connection IP. So in my inventory, I reset ansible_ssh_host like so:
[all:vars]
ansible_ssh_host={{ ec2_private_ip_address }}
Willing to be this will break something at some point if for no reason but that when destination_format is used it doesn't run the name through the to_safe method in ec2.py.