OK. Answering my own post here. I set up an standard http proxy to the
origin server and it seems to be relaying HLS as expected.

So the rtmp application is now...
                application live {
                        live on;
                        pull rtmp://89057213.r.cdn77.net/89057213;

                }

And the server config is now...
        location /live {
                proxy_pass http://89057213.r.cdn77.net/89057213/;
        }

Posted at Nginx Forum: 
http://forum.nginx.org/read.php?2,253613,253616#msg-253616

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