A specialist Chrysler garagiste helped me figure out some programming issues for free over a phone call, and he said "I wouldn't advise converting an older motor to ethanol, because the bearings can get worn into a gas regime, and if you change it, then you can give the metalwork of the engine a shock and cause damage"
I don't know if he was just making an euphemism about ethane-based gas. Can a motor be damaged by switching it to ethanol?
There's really no issue inside of the engine which should preclude you from switching from a regular petrol (gasoline) type fuel to ethanol. The reason for this is, ethanol doesn't affect the metal parts. The biproducts of ethanol during the combustion process doesn't affect the metal parts. The only thing which ethanol might affect is the soft parts like seals, but unless you are dumping raw fuel into your oil system (through incomplete combustion or over rich conditions), there shouldn't be a problem with this. I'm not quite sure what the mechanic (I assume you meant mechanic?) was getting at. Gasoline doesn't have much to do with the bearings of the engine and if it were to affect the bearings in any way, it's because it has found its way into the oil system. If this happens in great quantities, it can have huge detrimental consequences on the bearings, but in a good running/functioning engine, this is very rarely happening.
The only problem with switching to an ethanol based fuel is actually the fuel system. If any soft lines or gaskets involved with the fuel system aren't rated for ethanol, the ethanol will eat through it given enough time. This can cause fuel leaks and other problems.
Aside from what Paulster2 mentions, there's an issue that ethanol fuel has about 33% less energy density (by volume) than gasoline. As a result, the injectors need to inject up to 50% more fuel. This can tax the fuel system in a couple of ways during edge conditions of very heavy fuel usage. First, the fuel pump needs to move more fuel and may need to be up-sized to sustain usable pressure. Second, the fuel injectors may need to be enlarged if the fuel needs are beyond what the software can accomplish with 'duty cycle'. Also the fuel rails, lines and filter need to deliver it.
This won't be a problem in 99% of driving, but may show up in edge conditions like accelerating onto the freeway or doing a pass. But you never know - American automakers were under a lot of pressure from the US government to make their cars E85 ready, and engines get used on a lot of cars, so they may have laid the groundwork in injector and fuel rail design, just not enabled E85 for that particular model.
Smog data off the emissions systems will be very helpful in telling you whether the fuel is being delivered - flow problems will appear as the engine "leaning out" during those conditions. Although, we don't necessarily need the computer for that LOL.
You report this in a comment: " It's very powerful uphill, however max flow (40l/km) type volume causes the revs to click with a fast ticking sound." That sounds like spark knock under power - something I haven't heard since the carburetor days. This is cylinder detonation from a fuel-lean condition because the injectors are max'd out. This can break the engine (like: immediately). Steel parts in your engine were designed to operate within their "fatigue limit" - the stresses beneath which iron and steel suffer no metal fatigue. Spark knock can put these parts above their fatigue limit, and now fatigue is accumulating.
Whenever you observe spark knock while under power, instantly make it stop happening by doing whatever it takes to make it stop happening. Your engine may be damaged or destroyed if you do not. This was SOP for my family back in the carburetor days when a driver needed to know that.
On an electronic fuel injection engine that isn't lighting the "Check Engine" light i.e. smog systems doing their job, there shouldn't be a significant amount of fuel washing or blowing past rings or valve seals into the engine oil. That's one reason modern engines last so long - the computers keep the fuel mixture so precise. If the computer can't manage the fuel correctly, this old "fuel washing" problem from the carburetor days may return, giving us the short engine life of "the good old days". This is why it's so important to keep the computer happy.
To that end, note that from an engineering perspective, it's not so simple as re-jetting for ethanol. Nobody drains their tank dry when switching fuels, and you need to be able to run gas in a pinch. Thus, the system must be prepared for the tank to have any ratio from 0% to 85% (or your local maximums). That's why the computer and its fully integrated smog control system needs to be running "tip top" - to sense energy content and adjust injecting to fit. It already does that for unrelated reasons. One part of enabling ethanol is simply increasing gamut limits in the computer so it doesn't consider "67% of normal energy content" to be a system fault.
Rich or lean running will also cause the catalytic converter to run unduly hot - as it labors to eliminate the HC or NOX. As the cat fails, first it will cause you to fail smog tests, and going back to gasoline won't fix it because the cat has burned out. I know you said "ENGINE" damage, but I gather you care about other costs too. Worse, this condition may light the "Check Engine" light - fine then, you completely ignore the light or just disconnect it, but then it fails to tell you about other problems that do matter.
It is a good thing to ask other owners of similar cars for their experience. But generally, with a few exceptions it should not be a problem.
The things to look for first are all kinds of rubber and plastics in the fuel system. These may dissolve or react in contact to ethanol. Sometimes the inside of fuel tanks can be painted with a formula that might react.
The second thing to look for is fuel pumps and other moving mechanical parts using the fuel as lubricant -- ethanol behaves differently from petrol. This is where bearings may get worn.
Thirdly, gas engines designed to running on leaded fuel has to be checked for problems with lubricating valves, especially the exhaust valves.
Then check and change the engine oil regurarely.
