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Yes, a small amount of ethanol is the main ingredient in fuel line de-icers. The alcohol mixes with any water that might have condensed in the fuel system, and keeps the water from freezing. If the water happens to get picked up and pumped into the injectors or carb, the alcohol will burn and the engine won't have serious problems.
But...
you need to understand what octane means.
Octane doesn't necessarily mean that the engine will run stronger, it just slightly slows the rate of the explosion inside the cylinder. If the engine is pinging a little, higher octane can help; but octane won't necessarily BY ITSELF increase power. In fact, there is slightly less power (energy) per gallon in ethanol than there is in gasoline. A higher compression engine needs higher octane fuel simply because the combustion process is so much faster when the compression goes up.

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Q: Is it safe to add a small amount of straight ethanol to your car for an octane boost?
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