We work with two-stroke race engines and the problem with the ethanol, beside the decomposition of rubber parts is the ethanol does not mix with the oil as gasoline does. These oils were designed to mix with gas with a very low ethanol content or no ethanol at all. The flash point of ethanol is lower than that of gas, it is the mixing property's that is the problem. I would try using a synthetic or blend oil, and possibly a richer oil ratio 40/1or 32/1 etc. Also using a current design oil, and not something 10 years old may help. In South America the Japanese sell 2 stroke motorcycles that run on pure ethanol, thy have extra oil inputs for the oil injection and have a small tank with gasoline to aid in initial starting as the pure ethanol initial combustion is very poor. These bikes are down considerably in power from their North America counterparts.