The fact that the current regulatory regime hasn't forced the use of an octane booster that is acutely toxic is more of a case of a broken clock being right twice a day than it being good policy. I would even argue that in this case, the broken clock isn't even "right". As the OP points out, use of ethanol has negative consequences as well, and the fact that its use is mandated basically gets rid of any incentive to come up with a better octane booster.