There is a noticeable decrease in power when using ethanol fuel, because the amount of energy in gasoline is higher than in the same amount of ethanol. If an engine is not designed for use with ethanol fuel, it's not going to run as well. That means that our engines will perform better on pure gasoline than on E10.
Still, that's not to say that an engine couldn't be made to run well on ethanol. But if you want to go all-out on performance, pure gas is the way to go. In fact, I think some hardware stores sell jugs of pure gas at a pretty fair price.
Like I said before, the only parts in these engine kits(or mine, anyway) that seem to become damaged by ethanol is the fuel line, the rubber thing in the petcock(throw that junk in the trash anyway!), and the blue float bowl seal on the NT carb. All of those things can be easily replaced with quality ethanol-resistant parts. The only reason our engines should be damaged by ethanol is if the parts are poor quality. Most gas now is E10, so the parts that come with our kits should be made to withstand ethanol. I have also taken a look at my bearing seals and I have not seen any noticeable damage. But then again, who knows what different kinds of cheap hardware they throw into these china girls.
I doubt that ethanol can cause any serious harm, but the idea that pure gasoline works better overall is a well substantiated claim.