Greg, there are millions of cars and trucks running just fine on E-10,
E-15 and E-85 and they tend to run longer (much higher mileage in
today's engines) with no negative affects due to ethanol.
Eethanol's primary purpose is that of an
oxygenater to reduce carbon and unburned fuel in emissions. It
was introduced to replace methyl tertiary butyl ether (MTBE) that was
banned because it was contaminating groundwater.
The phase separation you mention might be a problem in large fuel tanks
(like in a car or boat) if the gas sits for years but I don't think
it's a big deal in a little generator with a gallon of gas in it or a
lawn mower with even less. In any case, I've never had a problem with
it in the generator or small engine gas tanks, even after sitting for years.
The E-10 can start going bad in months, not years. I run it but I keep
my gas moving. We boat 3-4 days a week, year round. If you have a
trailer queen, you will have troubles. You only have to read the notes
on a real boat board to hear about it.
I also hear people with small gas powered equipment around here saying
the same thing. Chain saws seem to be the main ones since they may
not be used that often although people with "natural" (not irrigated)
lawns may not start their mower or weed eater for several months
either. Climate probably has a lot to do with it.
Well, I guess I am lucky. I just remembered something. About 3 months
ago I bought a 1988 Lincoln Town Car from a guy who has a
collection of older cars. It had been sitting in his garage for
well over a year ... maybe a couple of years ... unused. He had
removed the battery for use in another car. We put a new battery
in it and after a few cranks it started up and ran fine. Car had
half a tank of regular gas in it (E-10). Since then I've put close
to 1,000 miles on it in around town driving. Obviously the old gas
is now long gone but the car ran and continues to run perfectly.