Distilery equipmet isnt that expensive anymore, depending on the degree youre goin to. If you wanna run you car 24/7 on homebrew, the cost of equipment to produce that much wouldnt be worth it. That might be a bit premature.. What sort of levels are you talking about? 25% ethanol or higher?
Impurities in water can be controlled easily. Either buy demineralised water in bulk, which isnt that expensive, or if you want a more long term solution use your own water filter and distilery. Theres enough water filters available on the industrial scale, no reason youc couldnt obtain an "offcut" of their filters going through the manufacturer. The big issue if you wanna run something like that is biofouling - this will usually be a sludge, but given the minute quantitites youll have, just dump it in the garden.
The idea of it is fantastic, but it depends on what concentrations you wanna run as to whether or not its a financially feasible idea...
I certainly would minimise straight tap water in the creation process though, for the sake of entirely repeatable results. The chlorine would be a small issue, but youd also have notable amounts of various metals, which would hurt your cat something fierce, worst case blocking the filtering elements (platinum-something?) with a physical barrier, then its GG cat.
Pure alcohol injection has a complrtely different combustion temperature doesnt it? Forgive me for doubting your tuning, but i dont know how much can be adjusted.
If you wanna run pure alcohol youre goingto need crazy amounts being in production, given poor fuel efficiency, and depending on your ethanol source this might not be viable without a full basement sized distillery. Then again i dont know the efficiency of turning say vegetable mass into ethanol mass, so i could be talking out my ass right here.
The cost of setup would write this off for me. Unless you could sell the stuff, but then youd need a bigger distillery... Chicken v the egg i guess