Phase separation results in free water and free Ethanol! Ethanol is a solvent… it displaces oil on metal surfaces. Ethanol burns at a much higher temperature than gasoline, and a mixture of air and Ethanol does not “sink” as much heat while being introduced into the engine. If (as you say), “the amount of ethanol does not effect the amount of lubricant in the mix, so engine damage would still only be a consequence of running lean”, I guess we can mix our oil with 100% Ethanol and safely burn it in our chainsaws… correct? (By-the-way, I wouldn’t try that if I were you)
Fuel is also a solvent and contains many other solvents that are added to increase octane. Like others have said some race saws run on alcohol, oils like Klotz original techniplate are made to mix with alcohol, nitromethane and it stays in suspension.