>>Seems there is a Hybrid Tahoe already out
I read a review of the Tahoe hybrid - they had a lot of good things to say about it, including that it does in fact give you 20 mpg or better with city driving. The downside they mentioned is that the regular gas Tahoe starts at $35,530 while the Hybrid Tahoe starts at $50,490!!
As for flex-fuel, My Chevy Suburban is flex-fuel (can run up to E-85). Below is a link to an Edmunds.com test of E-85 vs gas where they found E-85 gave you 20% - 25% less mpg. The owners manual for my Suburban states that towing is not recommended while using E-85.
http://www.edmunds.com/advice/altern...3/article.html