Yes E85 is more than half the HP of gasoline -- because it is part gasoline. Pure Ethanol would be closer to half. In any case the fuel economy goes down with E85.

The chevy boys say you can generally only run 13.5:1 ratio with E85. Pump petrol can do 12:1 already.

But the turbo boys say it compares favorably with 110 gasoline, which suggests the cooling factor might be the key.