No, E85 is not bad for the engine. It's good for it. It's fine for the fuel system too, as far as anyone can tell. You will find your answers on the mammoth thread on nasioc.
I had the pleasure of meeting and working with hotrod, the E85 guru, the last couple days. The man knows his stuff and he also moderates e85forum.com
. Lots of good info there too.
Since you are in Colorado (oxygen-starved high alt), drive a easily tunable turbo car, have E85 readily available, and are going stage 3, you'd be borderline foolish not to get an E85 tune. You could get a gas tune too, but I wouldn't pass up the opportunity to get the E85 tune.