All of the O-rings, gaskets, rubber lines and seals in the fuel system of the 4.7L are made with teflon, to include the Injector O-rings. It doesn't somewhat prohibit it, It completely eliminates itEthanol does have less energy per same unit volume compared to pure gas. So you do get less power and less mpg. It is higher octane but that doesn't give you more power unless the engine is designed for it (much higher compression and timing advance over what they are designed at).
Ethanol also can eat rubber parts, o rings, etc. I'm sure the E85 compliant vehicles have some sort of different material that somewhat prohibits this from happening, but I still wouldn't use it personally.
At that difference in price you should definitely be better off with E85.I just got some yesterday...it is $.90 cheaper per gallon. I've noticed no difference in performance, but the MPG on the EVIC has gone down a few, but it is city driving. For almost a dollar a gallon cheaper, I'm happy with the corn juice!