The natural choice for your last proposal is wood, not corn. If you include the 10x higher transportation costs per BTU for corn in the equation you will abandon it rather quickly.
How much transport costs are their for a farmer that has no wood on his property but has thousands of bushels of corn molding outside beside his full grain bins. For the farmer Its a lot cheaper than propane or wood.
Agreed, but this limits the fuel application just to the farmers and to the people that leave nearby. The vast majority of people live in cities and for them it will be hard to work.
At least in NYC, all we would need is some electricity for the trains, biodiesel for the buses and everyone else could walk, bike or skate. We don't use 1/3 the gas that suburban folks do.
I think you miss the energy needed to supply such a huge city with almost anything it consumes. With this plus the air travel included New York would be much closer to the average per capita energy consumption than it looks from first sight.