Marlo Lewis points out some of the problems with mandating that cars be able to run on ethanol (and other alcohols). Ethanol's weakness is a "result of competition."
I'd add: the cost would not be $100/car. It would be that, plus the cost of all the relevant infrastructure, plus the opportunity cost of companies not focusing on other energy options, plus some deforestation and higher food prices as unintended consequences in the agricultural sector.
UPDATE 2/1: Jerry Taylor of the Cato Institute on "Flex-Fuel Nonsense."