a few buddies of mine converted a banshee 350 to run on ethanol. It really was just a matter of jetting and some alcohol safe (green in color) seals. The E85 is corrosive so some of the carb seals will need to be replaced. eventually the crank seals will need to be done but for the moment they are ok. In certain larger bikes It could become necessary to install a fuel pump to feed the carbs.
Advantages - power. the bike runs cooler, so they can run a more radical setup (in this case porting and compression since it is a two stroke) and get away with it. if it were a 4 stroke, they could big cams, etc...
disadvantages - fuel consumption has almost doubled. it is expensive to operate, these guys have 50 gal drums of it at their house for their turbo race cars so it isn't a big deal to have another vehicle that uses the stuff, but for anybody else I would be wary.
ken, it is not cheaper than gas due to the tax breaks - you physically have to buy more of the stuff more often, it adds up over the course of a year if you use your bike for commuting.
BTW, we talked about e85 a dozen or so times in the past, is the search function not working?