It's an interesting idea. The more I read about the oil/energy issue as a
whole the more support I see for the idea that 'our' (the US/Western
world's) dependancy on oil is not going to be reduced so much by an one
magic bullet but by people converting their usage to several alternative
sources. That guy goes to bio-diesel, that woman switches to a bike, another
woman gets some kind of hybrid, some other dude buys one of these things.
The 4-to-1 water to ethanol ratio is a huge obstacle, but if you could
efficiently capture and use grey water (granted that may be a big 'if'),
then you would be fine, I think. Look at your water bill for your daily
usage and consider how much of that is possibly re-usable. Just finding a
place to set it up would be an issue for urban environments and apartment
dwellers and such. I wonder if if can be scaled larger, and how much?
Then you'd have zoning issues, fire code compliance, keeping the
neighborhood kids and drunks away from it...
Still... (no pun intended). : )

http://blog.wired.com/cars/2008/05/make-your-own-e.html

Cya,
Robert