No this is not an introduction to the vices of over indulgence, but a discussion of issues relating to the use of alcohol as a fuel.

Distillation

The first step in alcohol use in your car needs to be skipped by many. In the US, the assembly of a still must be accompanied by legal registration in the US with the Secretary of the Interior (26USC5179) - no flexibility here. The ATF is there to help you with that issue should you forget. There are provisions to help the small producer with the registration process to create alcohol for fuel, but registration is necessary at this time. (more)

Additives Registration

The Clean Air Act requires that everything added to your car fuels needs to be registered (more). While there might be a way around it if you are not burning gasoline or diesel fuel, basically you are required to have your formulation registered.

Modifying Your Car to Run on Alcohol

Given that the energy per volume of ethanol additive is less that the energy per volume of gasoline, your car generally needs to be modified to run on an ethanol rich fuel mixture; steps according to Mother Earth. These modifications include adjusting the fuel flow in the carburation process and also the pollution control systems. Unfortunately, those kinds of modifications are strictly prohibited by the Clean Air Act without complete testing (more). Your only real option for a late model car in the US is a flex fuel car (more) and E85. Many car makers have been making vehicles capable of running on upto 85% ethanol blends (E85). The US government has been a significant consumer of these cars and they are routinely available at auction (more).

Energy Density of Ethanol

While ethanol is highly flamable and can be used in an internal combustion engine, the amount of energy per volume (or weight) is less than that of gasoline. To do these comparisions, we will use the scientific measure of energy mega-joules(MJ) but compare it to the US gallon - or MJ/G. A gallon is equal to 3.78 liters for comparison and a MJ can be compared to 948 BTU or 0.2778 kilowatt hours.

Given that background, the enegy denisity of gasoline is 130.97 MJ/G compared to 90.85 MJ/G for ethanol. Therefore, a 10% blend (E10 or normal fuel in many places...) has ~127MJ/G and the 85% ethanol E85 has ~97MJ/G. These differences can complicate the decision regaring the price per gallon at the pump, so remember to take then into account. More at wikipedia.