E85 seems to be fine if your entire system is new, if it's had gas ran through it, it seems to cause problems. My friend has a new fuel system, he went low 9's with 122 cubes and a turbo, went 8.98 with E98 and top lube. He's had no problems.

I'd go with the 512 and race gas(or a 50/50 mix) and tune the chassis for the added power. When I had the 500" Dart on 10.5 tires it was a handful sometimes but it needed some chassis and shock upgrades.