The dynamics are a little more than just BTU content. Cummins and Ricardo have both developed E85 engines that take advantage of ethanol characteristics. Cummins 2.8L E85 inline 4 engine has the equivalent power as a 5.7L V8 and better fuel economy than the latter by more than a small margin. Ricardo's 3.6L E85 V6 engine, they have beefed up the guts considerably, boosted it, and it delivers the equivalent power of a 6.6L Duramax Diesel and also delivers equivalent diesel fuel economy. When one takes advantage of the cooling effect of ethanol when injected along with it's substantial octane performance and other features, interesting things can be done. The main reason that ethanol thus far delivers lower economy is indeed associated with BTU's, but as it pertains to running it in a traditional engine that was primarily developed to run gasoline and a few changes have been made to allow various blend of ethanol to also be used.
While the EPA has some play in the blending game, the maximum amount of ethanol produced, and allowed to be produced in this country, is 14.5 billion gallons. That is not enough to dose every gallon of gasoline to 10%. And if more of that maximum production is tied up in higher blends like E20, E30, E50, and E85, that is less that is available to make E10.