Octane number, and therefore compression ratio, certainly affects thermodynamic efficiency, but if you aren't putting the energy in you aren't going to get it out. So ethanol is starting off at a disadvantage.

(Idle speculation) I bet you could dissolve Hershey Bars in fuel oil and run 'em through a Wartsila-Sulzer RTA-96. Which the manufacturer claims to be the most efficient non-combined-cycle prime mover ever made (almost 50%). Would probably need a total rebuild afterwards though. And it wouldn't fit in a car - 1820 litres per cylinder, up to 14 cylinders.

PUD.

PUD,

To support your argument, I have said elsewhere on this post that the compression ratio/efficiency curve is pretty flat by the time 10:1 is reached. At 10:1 its about 60%, at 14:1 its about 65%. The additional load on the piston rings and the shearing loss in the oil film of the crankshaft bearings, imposed by the the additional load, mean some of this thermal efficiency gain is lost through increased friction. No amount of compression ratio increase will make up for the reduced calorific value of ethanol, period.