That's bullshit. You're only adding 10% of a *FUEL*. If you added 10% water, and it still ran, you'd expect an approx. 10% loss in efficiency. You could mix in kitchen oil (which will burn) and if you could get it past the injectors, you wouldn't expect a loss anywhere near that.
NO, you're the one full of bullshit. You're operating on the incorrect assumption that the only (or worst) effect a contaminant will have is to not burn. Stoichiometric ratio changes, burn speed (flame front speed) changes, etc.
Ethanol has a completely different stochiometric ratio from gasoline; it's more like 9.7:1 for E85, versus 14:1 for gasoline. That 10% ethanol requires twice as much oxygen to burn than the gasoline it replaced.
Ignition timing is based off a lot of factors to provide ideal burn, because it's a BURN, not an explosion (that's called detonation, and it cracks/blows bits of your engine when it happens.) A flame front travels from the spark plug outwards in a designed way, and it takes time to do that - it's not an insignificant amount of time relative to motion of the engine, especially at higher RPMs. Depending on the mixture, temperature of the gas/fuel mix, engine speed, and more - the engine computer decides when to fire the spark so that the burn is appropriately timed. When the burn is timed can dramatically affect torque generated and the kinds of emissions produced, because the pressure in the combustion chamber is always changing. A fuel mixture burned at one pressure burns differently from another - different temperatures, and thus different kinds of emissions output.
There's more. Rich mixtures burn slower and cooler; lean mixtures burn faster and hotter. Slower burns are less efficient, faster burns moreso. However, lean mixtures tend to blow/melt things, so everyone tries to avoid lean running if at all possible. Flame front speed will be dramatically affected by contaminants and additives.
If you put 10% cooking oil in your car's tank and managed to get them into a homogenous mix, you'd be lucky if the car started at all. If it did, the fouling of the spark plugs, valves, and catalytic converter would take minutes, if that.
Water? Well, aside from the fact that water and gasoline literally don't mix: the water would cause almost instantaneous rusting of the fuel pump, fuel pressure regulator, and fuel injector pintles.