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If my 3.8L was making 900rwhp you do realize that it'll go much faster and quicker than your fwd honda with 450whp right? So it wouldn't be equivalent first of all. Second of all, my mustang is my dd, I do not need 900rwhp to get from point a to point b. Third of all, if I wanted to make 900rwhp I wouldn't want to modify 3.8L just like I wouldn't modify honda motors, for a simple reason, too expensive, there are better/cheaper ways to make that kind of power.
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900/3.8=236.8 HP/Liter, 150HP/Cylinder
450/1.6=281.25 HP/Liter, 112.5 HP/Cylinder
Of course a your Horse would beat the Honda at these power levels; there is more to be considered than power here, though. Regardless of what you think, from an engineering point of view (the important POV, which lacks judgement based on distaste for certain views/preferences), it's still impressive, to say the least.
900 BHP in a 3.8
is comparable to 450 BHP in a 1.6.
If it's not, then maybe my 4 month old son should be able to lift 230lbs like I can? I mean, he's still human, right? Just like his dear old dad? That's exactly what you're saying when you act like 450 HP in a D16 isn't an impressive number. You're saying that Honda's small displacement engines aren't capable of making comparable power, and it's simply not true.
At power levels that high in a street driven vehicle, your Fast, Cheap, Reliable question is blown out of the water, anyway. I don't care how much money you have available to spend on it, reliabiliy becomes relative in a high HP street car.
To the question of E85, and why one would want to use it, it can handle much higher combustion pressures and temperatures without detonation. It has an apparent octane level higher than some race fuels. It's reasonable to think that you could have 14:1 dynamic compression ratios while still running boost, and not get detonation with a proper tune and timing curves.