1) I'm a significant investor in two ethanol plants. In one I'm a limited partner and in one I was with the general partner group. Our family did about two years of diligence before making the plunge.
2) Ethanol subsidies should be removed, because it's the right thing to do. Picking winners and losers is a mistake regardless of the circumstances.
3) People get riled-up over ethanol consuming corn, but corn was never the end game for ethanol -- cellulose is. Cellulose represents about 60% of all organic matter on the planet. You can't get away from it. I'll guarantee that as you read this, you aren't more than 12 feet away from some cellulose.
4) The idea since at least the year 2000 has been to use traditional sources (sugar cane, corn) to gain a foothold in distribution, then convert to either a biorefinery (bugs that eat cellulose and make CO) or an enzyme-based technique that turns cellulose into glucose (ORNL is surprisingly close on this one).
5) The problem with alternative fuels in general is the three-fold nature of the problem. It's not just the fuel technology, but it's also the infrastructure to deliver the fuel and the upgrade path for consumers. To most people, their car is the second most valuable asset they own (and sometimes the first, for renters). Just about any whiz-bang technology other than a car you can plug into the wall will be a huge investment risk to your average Joe.
But in a weird way, ethanol is emblematic of our larger problem with alternative energy. It's a really grunty solution that involves carbohydrates, uses our existing infrastructure (service stations) and can be easily worked into an upgrade path for consumers (i.e. flexfuel vehicles). But we're Americans. And Americans don't like grunty -- we like sexy. So instead we'll chase even more exotic batteries and make bigger and bigger technology bets in the name of whiz-bang technology. And I'm not really being critical here. It's just our way. I'm gonna snicker when all these exotic batteries with cadmium and lithium start showing-up in the bottom of lakes and in garbage dumps. We've got a big enough problem with the smaller lead batteries as-is.