The ECM retards or delays the timing if it senses knock through the knock sensors in the block. The timing will run at the setting pre-programed into the ECM. This setting is predetermined by the engineers and will not move beyond this maximum no matter what fuel you use.
Retarding timing makes less power.
Increasing timing makes power.
Back in the day before computers we had full control over the timing. But many a motor was trashed by somebody trying to advance the timing to far. Pre-ignition will melt a hole in the top of a piston or bend a connecting rod.
If your car calls for premium you actually affect the efficiency of the motor and your gas mileage by using a lower octane.
Ethanol is a joke and actually has a lower thermal burn therefore producing less power per gallon compared to straight gasoline. It also draws water and is corrosive to steel fuel lines. It also causes plastic fuel tanks to swell. Ducati had a major issue with their plastic fuel tanks and Ethanol.
To answer your original question, putting premium in a engine not designed to use it won't damage it, but is a waste of money. Many here have said different, but it comes down understanding what the ECM can and can't do and the science behind it.
The one thing everybody has to understand is that your motor is one large physics project. Every change you make affects the properties acted on by the other laws of physics and science inherit in a internal combustion motor. If you ever get the chance to talk to a engineer that designs internal combustion motors you would be surprised by how many misconception there are on these forums.
Last edited by mlheck; 02-10-2014 at 04:33 PM.