Just to add to what you are saying - supposedly fractional distillation of ethanol can never result in a 100% pure product - meaning that water will always be in ethanol.

The ethanol "solution" is not completely well thought out yet, that's for sure.

HOWEVER

From an engineering viewpoint, Ethanol is what it is, to quote Dilbert. It has its strengths and it has its weaknesses, but on forced induction engines, it has a definite use due to its knock resistance.

It's the same deal with adding Toluene into your gas. It has advantages and disadvantages, but when you're on the dragstrip, it does exactly what it's supposed to.