I think Khosla has a cognitive problem. He has always dealt in an area that has few limits other than imagination and where exponential growth is possible and expected. Nothing in his life experience has prepared him for dealing with real, hard and fast physical world laws of nature. Therefore he `feels' that ethanol is no different and if we need it, then by golly, he is going to made it happen!  In order to sell his idea, he may have the `stretch the truth' a little bit. Anyone here ever had an IT project a little(lot) late, over budget and not exactly what you were promised it was going to be?
Geologists, petroleum engineers, and even farmers know all too well, that  no amount  of trying is going  to find oil where there is none nor grow a crop on rocks. So for those people who have been constrained in their professions by physical reality all of their careers can see the difficulties with ethanol production. (thank you RR for an excellent analysis). All farmers know about the capriciousness of the weather and the random unpredictability of  nature. Most of our attempts to circumvent these problems have been to throw oil in some form at  food production. Even the much vaunted GE crops really have only produced two basic new adaptations and one of those is simply to allow the plant to survive an oil-based herbicide!
Of course we are all products of our individual life history and I have been subjected to many, many team building courses over the years in which one of the principles instilled in me was `Assume Innocence' and look for the underlying reason.
The really big danger, as others have pointed out, is that Mr. Khosla has the ability to lead us down  the wrong path thinking that we do not need to conserve and develop more energy-efficient transportation methods. Most of us(myself included) would prefer to keep driving our personal vehicles if we think that is an option and this is the danger.