Earlier quoted context omitted.
It's a simple case of it's energy density. The energy content of ethanol is about 33% less than pure gasoline. Higher octane doesn't even necessary equate to higher gas mileage. As soon as octane is high enough for your engine tuning, there's no mileage benefit.
> As soon as octane is high enough for your engine tuning, there's no mileage benefit. That's exactly my point. Would it be possible to design an engine from the ground up for very high octane fuels?
Stock cars generally don't take full advantage of the octane benefits of E85 because they will blow up if someone fills the tank with E15. But in the aftermarket world, "corn powered" cars make substantially more power, especially turbocharged ones. They have the benefit of owners that understand to manually switch maps when changing fuels.