I am a member of a CSE group in Hutchinson, MN. We are planning to produce several thousand gallons of ethanol per year for our members and a portion may be sold to the general public. As part of our effort, several group members have been experimenting with various blends of ethanol in different engines, to collect real data as opposed to the anecdotal evidence found in abundance on the web. It is sad how much blatantly false information is being casually thrown around by people who have no clue as to what they are talking about.
My experimentation has centered around my 1967 John Deere 112 lawn tractor. It has a 10HP Tecumseh engine, and has evidently led a very hard life. It seemed like a good candidate to test, because it is would be an extreme worst-case being that it was clearly not originally intended to run ethanol, and also because if there was any damage the loss would be minimal.
My results this far have been outstanding. I started out in the spring running a 40% ethanol blend, and the performance was noticeably better than with "normal" (E10) gasoline. The difference is when the engine is under load, it does not bog down and stall as easily as with straight gas. It ran so well, in fact, that I quickly switched to E85 just to see how it would run. Surprisingly, the carburetor adjustments were minimal (mostly an idle mix adjustment), and the engine has run perfectly well. It ran noticeably cooler in the summer, and has run great thus far for snow removal (down to near zero F). It does take a small shot of ether to get it to start in temperatures this cold, which is not unexpected with ethanol. My next step will be to run straight (denatured) ethanol from our distillery.
In the interest of adding to the data pool, I have noted two material incompatibilities, both related to the fuel filler cap and its built-in fuel gauge. Shortly after switching from E10 to E40+, the clear plastic lens on the fuel cap warped and shriveled up, which seems likely due to the ethanol. The cork float on the gauge has also disintegrated, which may or may not be due to the ethanol. It is 40+ years old after all. If you want to run ethanol in a vintage machine, I would recommend replacing this type of fuel/cap gauge to prevent damaging a valuable original piece.