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Will e-85 mix with 87 octane gas? Yes, but.. if you are trying to raise the octane, why not start with 92/93 Octane?
Will ethanol lose the ethanol from evaporation when siting in the tractor gas tank? No, not any more than the gasoline. Ethanol is harder to evaporate than the light fractions in gas, which is why it is difficult to use pure ethanol in cold climates.
Is 10 or 15% ethanol about right for a gas 165 # compression tractor at stock rpm's? There are two many factors (cam timing, ignition timing, combustion chamber design, volumetric efficiency, etc.) to make a simple judgement. You will have to try it. 165psi is not particularly high and just 93 Octane gas may be enough without the E85 (with 85% ethanol), but adding Ethanol (as E85) will raise the octane rating. E85 has an octane rating of about 105 [Pure ethanol has an octane of about 110, maybe as high as 116, depending upon the reference you use.] To estimate your octane, use as an approximation:
Omix = 93*(1-x) + 105*x
where x is the fraction of E85 mixed with 93 Octane gas. Change the 93 to 87 if using regular. And some sources use from 100 to 110 as the octane rating of E85. Keep in mind that E85 is not pure ethanol and starts with only 0.85 fraction Ethanol and 0.15 fraction 87 Octane gas.
Another reminder though; you will need to richen the mixture SIGNIFICANTLY as you use more ethanol which will usually require changing or drilling out jets.
And another potential benefit of using Ethanol, is the cooling of the inlet air by evaporation (i.e., more than gasoline) although that can also create problems without enough compression or a hot enough ignition.
Jim
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