Shouldn't it be possible to design farm equipment that could run off of diesel fuel for the short term but switch to E85 once ethanol-producing agriculture is scaled for it?
The short answer is no.
The minimally longer answer is that it's only feasible with a turbine, because diesel fuel is a fuel oil which is ignited by compression ignition, while E85 is a highly volatile fuel which is ignited by spark ignition. You can run both types of fuel in a turbine, but not reasonably in a ICE, because you need around 16:1 compression for diesel (but it's better with around 21:1 or higher - virtually all modern diesels use relatively-low-for-a-diesel static compression around 16:1 and then add a turbocharger to raise compression) but you only need about 12:1 for efficient burning of E85. And variable compression reciprocating engines are so far unreliable.
Seems like it's merely an engineering problem
Oh, is that all?
In the real world, most engines are replaced every 10-20 years, whether a whole vehicle is replaced or the vehicle is repowered. There's therefore no benefit to making an engine which runs on multiple very different kinds of fuels as the engine will be replaced anyway, with one notable type of exception:
Multi-fuel engines generally come in two types: those which run on multiple liquid fuels, which all run on multiple similar fuels, or those which can run on a liquid and a gaseous fuel, sometimes both at once. Besides small gensets, which are often able to run on either propane or gasoline, there are a bunch of modified diesels with upgraded turbocharging and added propane fuel. This used to be fairly common when we had mechanically injected diesels, because it was difficult and therefore expensive to upgrade the injection pump. Now that we have computer controlled diesels, you can usually just reprogram the PCM to inject more fuel. Instead of going to added trouble to add more fuel, now people add water. Injecting water into a diesel's combustion charge cools the combustion chamber and also produces power from phase conversion, and it can be triggered automatically based on exhaust gas temperature.
The old school "multi-fuel" ICEs are compression ignition engines which can run on a variety of fuel oils including #2 and jet fuel. We used to have some of these in military use, but they have also declined in popularity because they could be tuned wrong, causing damage. Today we do have E85 engines, which typically can be run on gasoline-based fuel with any percentage of ethanol up to about 85%. They have high static compression and use a fuel quality sensor which determines the mixture and tunes accordingly, retarding timing and therefore harming performance when there is less ethanol in it. This is also popular for highly turbocharged gasoline engines, because the higher volume of ethanol fuel necessary to make a given amount of power means that there is more combustion chamber cooling from fuel vaporization. But this again only works because the two fuels being mixed have similar properties.