Sorry I'm contributing to this thread drift but...
Rob, your friends BMW's computer is probably changing the timing and possibly valve timing so it can use both octanes. It could be changing compression by changing combustion chamber size but I am not sure how you would do that unless it pushes something into the combustion chamber. That would reduce the size and up the compression. If you compress any fuel to higher pressure it will have more power and be more efficient. That's why diesels work so well.
I also have seen modules that you put between your injectors and the wiring harness to change the fuel distribution so you can run E85. It takes data from the exhaust and injects more E85 to correct the lean mixture. Somehow that prevents knock but your running more fuel to do it. You can retard timing too but both ways cause you to lose power and mileage. You just need to figure where the break even point is to see if it actually saves you money.
According to this guy you can run E85 in your car. I am going to put some in this old CNG truck and see what happens. It has 300K and isn't worth much anyway. I was thinking of running half and half and see what happens. http://www.youtube.com/watch?v=WEZuVfAAK_I
Marty, why do you compare "Actual" E30 and E10 figures with "Published" E0 figures for the Prius. Go fill up the car with real gas and drive the same course. Then we might believe you, but I doubt it because it's obvious that your biased on this subject. No car I own gets better mileage on E10. My trucks drop 30% and I have a 2000 Mercedes and it drops 10%. Both have less power using it. That's real word testing. It costs the same so why should I use it?