Yep, American Ethanol is one of Keith's major sponsors this year. He is running Sterling engines, around 1550HP, in Cat Can Do that are specially built to run E85 fuel.
In Keith's defense, he did say "racing engines for watercraft" which, when specially built to run Ethanol do run well.
Ethanol is interesting in several ways. One of the things no one tells you is that, when running ethanol, you will need approximately 30% more fuel to make the exact same power in an engine. Ethanol has over 30% less BTU's than gasoline. Ethanol does however have a higher octane rating so, when you raise the compression ratio of the engine, you can make more power with ethanol than gas. That is why it works well in racing engines. Engines that run variable turbochargers, can therefore raise the effective compression ratio by increasing boost.
Another interesting thing they tend to leave out, especially when discussing the pollution side of things, is that ethanol makes over twice as much ozone as gasoline. And also that ethanol emits significantly more cancer causing emissions than gasoline. Especially aldehydes, a group one carcinogen.
Oh, and did I mention, that ethanol also attacks not only the fuel tanks made of fiberglass, but also is highly corrosive to aluminum?