I don't think you would want to synthesize it from ethanol. I think you would be deeply in the hole on the energy balance. Given that ethanol is already marginal, you are going to end up with a butanol product that definitely required more energy input than the final product contains. Far better to synthesize it directly.

Well I think you just answered the question about using ethanol for anything but high value needs. If its too expensive to use as a chemical feedstock then its proabably not worthwhile to burn it for general transportation.

If people don't feel its valuable as a feedstock then why the hell use it for transportation ?

Oil/Natural gass feedstocks don't suffer these problems. GTL for example is viable even CTL's.  

I think we do need to find a renewable reduced carbon source for future transportation needs mainly the airline industry and critical off grid transportation and for chemical feedstocks.

Ethanol does not solve this problem.