Thank you for mentioning the details of what the damage means and for mentioning energy density. That's a real-world drawback we experience immediately. Ethanol does create domestic supply chains for oil for many nations though, and it's always beneficial to have a variety of effective methods to meet major demands of our societies. While the octane rating is higher for ethanol than gas, since we still buy the same ratings I can only assume oil companies are reducing the refining costs of the gasoline to minimize the net cost of the fuel.
For a data point on the car's behavior and how well optimized it would be to use a blend, I retuned the ECU on my 2006 Honda S2000 with a product by Hondata. The fuel injectors used a preset fuel-air ratio settings map for wide open throttle across the RPM range, and it used an oxygen sensor to approach ~14.7:1 air:fuel for part or light throttle. It was an open loop system with a long and short term fuel trim adjustment to keep it close to that target. The wide open throttle settings map was a little more rich than stoichiometric to keep the motor safe since running lean produces detonation--it targeted around 13:1, but the precise number seemed to vary by car model and even by individual years of the same make and model; a major trend was turbocharged cars typically were more rich than naturally aspirated vehicles. I understand my 370Z and others work generally the same way.