I'll try to be brief!
E-85 is 110 octane. octane is only good if your engine needs it...octane means RESISTANCE to burning. there are very good chances that adding higher octane than what you need to your engine, will actually make LESS power because the fuel is burning slower
so on a standard, low compression engine, E-85 is a waste, as you get less mileage, and less power, when the engine is "set up" to run on BOTH 87 octane pump gas, and E-85.
E85 can be a great thing if they build the engine STRICTLY for E85, and give it 13 or 14:1 compression, where you would normally need expensive race gas, now you can run cheap E85 out of the pump. when engines are built for E85, they will make MORE power than when they are run on gasoline.
you still get lower mileage though due to the lower BTU value per gallon of alcohol vs gasoline.
cost wise...I got bad news for you. the only reason why E85 is cheaper right now, is because it's getting a government subsidy in the form of a $1 per gallon tax break...once the government decides to tax E85 the same as regular gasoline, it will be MORE expensive than 87 octane pump gas.
plus, depending on what they make it from, E85 isn't all that effecient...say if it's corn, they get something like 7 gallons of E85 for every 1 gallon of gasoline they burn during the entire process --diesel for farm tractors, and hauling around corn to market, etc. to the ethanol plant, the energy put into the process to turn it from corn into alcohol which requires lots and lots of heat to cook the mix prior to fermentation, much like making beer. then the gasoline they mix it with to mix the pure alcohol down to 85%
imagine what happens with that 7:1 ratio when EVERYTHING is running some sort of ethanol/biodiesel, and is getting 20% less mileage!