There are multiple disadvantages when using ethanol as an octane booster.

First is the latent energy of combustion:

1. Ethanol: 75,700 Btu/gallon
2. Gasoline: 115,000 Btu/gallon
3. Toluene: 114,056.98 btu/gallon
4. Xylene: 115,000 btu/gallon

Less energy output = less power per unit volume.

Second is the fact that the ethanol has vastly different nernst cell O2 sensor readings for stoichiometric combustion compared to gasoline. I've seen a few posts about this, but some cars have been running badly due to bad O2 sensor readings from Ethanol/Gas blends.

I've used Toluene with considerable success. I didn't want to experiment with Xylene due to the health hazards. Other people have mentioned using commercial racegas recipes.

Ethanol is great in an E85 or E100 mix (it's not corrosive like Methanol) but unless you have a good way of dessicating the fuel, long term use is going to mean rust somewhere down the line.