Not only is it likely that you'd have to clear customs in Cairo, it would be the easiest. You'll find a higher percentage of people who speak English in Cairo as apposed to Luxor.

That having been said, getting through the Cairo airport in general is not always a great experience. The word "scrum" is quite accurate, and not just for buying the visas (which really isn't that bad--I've done it both ways). Visas are 15 USD.

And, both time I've flown into Cairo I deplaned onto a shuttle bus that took us to the airport, just as an FYI.

I don't think 1 hour would be enough, and the 4 hour layover would leave you probably with around 2 hours when it's all said and done (assuming you clear customs/passport control in Cairo).

Did you call EgyptAir about this?