Solution, thy name is Path Dependence.

#5 is the most immediate concern. And for the record, I can report that based on conversations with many people here in the fashion industry, Yellow is not the new Green.

We already have an entrenched interest group with the decades old subsidy of corn and the direct subsidies for ethanol.  It has already become a juggernaut, especially in the corn states, so it may already be pretty hopeless.

But my question is, could these corn ethanol plants be readily converted to produce ethanol form cellulosic material?   Regardless, of course, we don't even know if cellulosic is even feasible on a large scale.  

Khosla's hold card seems to be a bunch of secret projects, which of course we are not privy to.  Sounds like a good strategy if you don't want people to know how fallacious your claims are.  We obviously need more transparency here. Taxpayers in California should be providing money without transparency.

One of the problems with industrial corn farming is its destruction of organic soil matter and top soil. To what extent will cellulosic ethanol become another way to destroy yet more soil and contribute to the release of carbon dioxide from same?  

Khosla argues that ability to pay, not supply is the grain problem. But isn't ability to pay related to supply which impacts prices?   When the prices go up in the supermarket, my ability to pay will obviously be impacted. This ability, or lack thereof, will start amongst the poor and work its way up to the middle classes.  Or does supply and demand somehow not operate here?

As Khosla says, coal will be cheaper than biofuels. So, therefore, isn't there a danger in encouraging the development of PHEV and EVs.  Based upon an analysis that looks at the grams of CO2 emitted per kwhr based upon the natural average mix of fossil fuel energy inputs, it appears that a Prius, for example, would emit less CO2 per mile in electric mode than a conventional Prius getting 50 miles per gallon. The advantage would be much greater in California which has a relatively low mix of coal.  However, if we ramp up coal per the plans of the utilities and the coal companies, we will cross over to the point where a PHEV or EV will not be an improvement over a conventional hybrid.

But my question is, what is Khosla's point here? Is his point that we should subsidize biofuels to prevent the introduction of coal?

Regardless of what path or paths we pursue, we cannot maintain the current average fuel economy and do what we need to do to combat global warming.  Most estimates I have seen say that we need to reduce co2 emissions by 70%. Just focusing on the fuel choice end of the equation will not cut it.

321Energy has a pretty good article today that discusses some of the items you mention.
http://www.321energy.com/editorials/anwar/anwar072906.html