The current corn/ethanol program, like most government programs, is pork from top to bottom.

As you point out, ethanol and methanol have potential if they can be made from cellulose-rich wastes, or "junk" crops that grow in areas unsuitable for food crops and require little maintenance.

Popular Mechanics did a good treatment of the practicality of alternate fuels here.

A good first step might be to start building diesel cars with the equipment to burn a wide range of diesel-type fuels, including biofuels. I understand this costs about $500 a car.

Meanwhile, our brilliant Congress keeps us from drilling for oil and natural gas in our own nation, so we have to import it from nations run by loons (mostly).