For some reason people are bent on blasting potential solutions because there are clear negatives. Ethanol could never replace oil because of some of the things you mentioned however it does provide a quick solution to make up for a percentage of fuel consumed. Quick because there is little that manufactures have to do to convert a engine to run on Ethanol and Gas at the same time. For any alternative fuel to work it has to be accepted by the market place. Most people won't consider hybrids because you have to plug it in and it costs more. With Ethanol both those negatives are removed...however it's hard to find Ethanol stations to fill up. That would only be solved as Ethanol become more used. The market place has to provide a demand for it. One nice thing about Ethanol is that it's like running high octane fuel...I like that. So at the end of the day Ethanol could be a solution that would attract people who prefer a car that runs like the car they are used to (gasoline). For others they may prefer a car that although they have to pay a good bit more for it and plug it in gets way better fuel economy.
The "miracle" part of Ethanol is that it does not require 20 years to research, perfect and get switched over to it and it is a fuel source that can be provide here in the US. For all those farmers who have been working their tails off for dimes they might get a financial boost out of all of this. And us car lovers still get to hear the sound of a combustion engine rather than the silence of an electric motor.
