Several news sources are reporting stories like this one:

http://abcnews.go.com/US/wireStory?id=3051493

Each year, about 4,700 people, according to the study's
author, die from respiratory problems from ozone, the unseen
component of smog along with small particles. Ethanol would
raise ozone levels, particularly in certain regions of the
country, including the Northeast and Los Angeles.

"It's not green in terms of air pollution," said study
author Mark Jacobson, a Stanford University civil and
environmental engineering professor. "If you want to use
ethanol, fine, but don't do it based on health grounds.
It's no better than gasoline, apparently slightly worse."