Ethanol really is not that bad, all that needed to modify an engine for it is to change the fuel air ratio, and replace pieces exposed to the liquid ethanol with stainless steel or plastics. Despite having only 2/3 the energy per mass as gasoline, ethanol burns better then gasoline under compression and engines with very high compression ratios can be used thus increasing the amount of power per engine mass considerably.
Why diesel engines anyway?, why not foil bearing turbines? Turbines can be more efficient (at least in a hybrid platform) and it does not care what fuel it runs on, you could run on any liquid fuel, not to mention that they are smaller and easy to manufacture.
I would like to see how biofuel ethanol is a greater pollutant then gasoline, I
