If an engine was truely designed to run on the much higher octane then it might be somewhat beneficial to swap over to a high ethanol blend but your typical engine won't really benefit from it (granted I am not entirely sure what the kit you are looking at includes or does).
Timing. The higher octane allows the timing to be advanced. Obviously this is best done on a dyno, as there is a limit where advancing timing won't result in any power gains, but most motors can get a 5-15% gain in power from advancing timing 2-5 degrees.
If you are really that interested in making the switch, one of the biggest things with dealing with any of the bio-based fuels is the seals and fuel lines. The bio-fuels will eventually destroy rubber seals and hoses, and therefore need to be switched over to something like viton (a synthetic rubber).
Wrong. Every vehicle sold here in the US mfg'd past 1990 is ethonal compliant, meaning that E85 won't do anything that the gas in your tank currently is doing.
The other big thing about E85, or any other blend of it, on just about any engine will not give you better fuel mileage, it might (at least in your case) cost you less per fill up. Ethanol is less energy dense than gasoline (which is less than biodiesel, which is less than diesel). If you actually look up the specs on vehicles that are FlexFuel, their mileage numbers running E85 are lower than they are running gasoline.
Yup. But: With the way gas prices are, the $ savings VS MPG loss is greater which means your still saving $ compared to running gas. factor in the timing benefits, and your even more on top.
I know this post probably wasn't what you were really looking for, but my opinion is that it probably wouldn't be very beneficial. At least look into the seals/lines if you are going to go ahead with it especially if you have an older engine.