I saw this metal fuel thing in Scientific American a few months ago, so apparently there's some intensive R&D in progress on this. We'll see some commercial applications soon, I have no doubt of this.
I also read about some guy in Germany who owns a chippy and modified his car to run on the used vegetable oil he got out of his deep friers. No idea if it's true.
Now, regarding the water as a greenhouse gas thing, the basic difference between water and CO2 is that water (obviously) isn't a gas in normal temperatures. There's no doubt that there's an increase in water condensation in the atmosphere, but that's a symptom of global warming, not the cause of it. Naturally now that the extra water is there it exacerbates the problem, but it was likely the increase in all the other greenhouse gases in the atmosphere that originally caused the global warming and increased water evaporation.