What does gasahol do to the
fuel system that is destructive? For that matter, what damage does it do to
the engine?

1) You will only get 95% of the engine's output power compared to pure
gasoline,
2) Your fuel system elastomeric seals, diaphrams, floats etc are not
compatible with any substantial alcohol content,
3) The vapor pressure of the alcohol-laced fuel is higher,
4) The long term storage properties are horrible.

Did I miss any?