Just to chime in and whore my post count
This simulates the same experiment I read about somewhere on the internet about finding an E85 approved oil. I now use mobil 1 synthetic, which is E85 approved. The old, cheap pennzoil I was running wasn't approved for it. I filled 2 test tubes with about a tablespoon of E85. The one on the left turned a bit of a cloudy white with Mobil1. According to that experiment I can't find the link to, that's what E85 approved oil does. The other was this watery brown color with E85 mixed with dino oil. Regular oil dilutes with E85. The synthetic oil actually looked like a water/oil mix, with the oil suspended in the mixture rather than sitting on top.
I'm also going to the dyno this weekend to test the full E85 tune