Well, Temperance was a popular moral crusade, and it pre-dated Ford's Model T. It was very much focused on alcohol as an addictive drug that destroyed lives- especially the lives of working , blue-collar men, who could therefore also destroy the lives of their families. Temperance leaders were often local ministers, Temperance songbooks included hymns and patriotic songs. So, if Rockefeller saw it as a useful way to prevent alcohol from being used in cars, it was a side-effect, not a cause of the movement. Not the first time a businessman used a social movement for personal gain, either.

Ford might have been too optimistic about the cost of producing alcohol; even today, it's often debated as to whether the energy gained from fermenting corn is that much more than the energy put into growing it. But he came from a farm, was concerned with farmers throughout his life ( he did more to invent the tractor, and create the soybean industry, than anyone else) and ethanol came from farms, so he probably liked it for that reason. Ford may also have been suspicious of availability of cheap gasoline. When the Model T made the personal automobile the standard mode of transport, gasoline became very available, but he may have been dubious about that in the 1890's, when he was developing his engine.

Okrent's book Last Call is a good history of the Temperance movement.

If ethanol had been a cost-effective motor fuel, Prohibition would not have impacted its development.

Ethanol continued to be produced during prohibition for use as an industrial chemical. Ethanol is an essential component of many chemical processes.

Ethanol was mixed with various other chemicals, some poisonous, some foul tasting, to create denatured alcohol, that was not consumable by humans, but could still be used for chemical processes. The practice of denaturing alcohol began even prior to prohibition, because there has traditionally been a large tax placed on alcohol for human consumption. Denatured alcohol would not be subject to the high tax. Denatured alcohols are still created today, as a fuel, cleaner, solvent, and chemical feedstock.

http://www.ethanolhistory.com
http://www.warnergraham.com/2013/06/prohibition-and-denatured-alcohol/

As /u/Bodark43 has said, it is not clear that corn Ethanol is a cost effective fuel vs. petroleum fuels, which is likely to factor in why it hasn't found widespread use in the U.S. without significant government influence encouraging its use.