Hi downunder, many thanks for your comments, the reason I tried E85 was pure curiosity and inspiration by many 2S users "up here" in Sweden who use it with success. But basically I milled the Saito cases to get rid of the nitro and/or the OBGD on methanol fuel.
Another drawback with E85 (apart from safety) is the unpleasant smell...[:'(]...having the stuff in the back of your car or in the shop - always eager NOT to unnecessarily disturb my "government".......you know.!
But you say that ethanol will not tolerate the same (high) compression as methanol and I wonder why because according to my books they have almost identical octane numbers..!?!? OK, the 15% gas part will lower it but very, very little so I wonder if you can elaborate a bit on that remark....thanks.
Wayne_C, I think you are right to add more oil since your needle setting will become leaner and people here say that their 2S engines run hotter on E85....Castor oil.?..absolutely......I just love them beans...!
Jim, yes your "eutectic parable" seems most fitting, it appears the E85 mixture has a wider temperature interval within which it is explosive as compared to its pure components.

Cheers/Harald

http://www.eere.energy.gov/afdc/altfuel/whatis_eth.html

(see the 116KB pdf file at the bottom)