I do as well. In the long term Oil Shale and Methane Hydrates along with coal and nuclear will provide a lot of energy for this country. In the short term we need to produce our present day resources like drilling for oil and gas and mining uranium and coal instead of letting environmentalists shut us down.
But the Pimental study is horrible. Just look at the basics of the energy content of ethanol (the finished product, not the net) and corn yields he used. It is so blatant that he cherry-picked numbers to push his claim. They do not come near typical values.
The probllem with your demand that ethanol by products be used to fuel the ethanol still is that those by-products are edible and have a much higher value as high protein animal feeds. Sure, DDG's will burn (and in so doing produce more heat than is needed to drive the still), but at current market values the DDG's are worth much more as animal feed.