The major downside [other than water] is the lower BTU of the fuel. This can cause a 3-5% drop in mpg compared to non ethanolized [oxygenated] fuels.
Engine power output is tested [certified in Japan] with custom lab grade fuels and these are very superior to even US conventional available at the pump so expect some reduction but what's a few tenths considering the benefit to farmers and ethanol corporations and truck drivers and railway companies.
All ethanol must be trucked/railed to local city tank farms instead of pipelined as MTBE was [mixed in at refinery].
Everything about ethanol production:
http://www.usda.gov/oce/Ethano...3.pdf"Ethanol is the new Jolt Cola: twice the price, and double the pollution""""[/B