Unless I have misinterpreted your argument, you seem to be assuming that 18 lb of DDG directly substitutes for the original bushel of corn. If that's what you're saying, it's incorrect. According to
http://www.rurdev.usda.gov/rbs/pub/sep06/measuring.htm:After years of research and a number of technological developments (and a lot of education), feeders learned the nutritional value of distillers grains with a high level of precision: it equals from 120 to 135 percent of the nutrition of corn in the feed ration.
The DDGs from a 56-lb bushel of corn retain (18/56)*1.3 or 42% of the nutrient value of the original corn. The other 60% or so of the energy in the original corn gets burned up in cars or perhaps used as process heat to keep the coal and natural gas consumption down. So the DDGs from 17.5 billion gallons of corn likker production would replace about 2.5 billion bushels of feed corn. That leaves a requirement for 3.6 billion bushels.
Of course that 17.5 billion gallons of white lightning doesn't replace the same amount of gasoline due to its lower energy content. Then there are the small matters of transporting and drying the extra 4 billion bushels or so of grain (the mass of the original 6.5 billion bushels that doesn't turn into DDGs), the natural gas needed for the fertilizer to grow it, and the pesky issue of process heat for distillation - all that EROEI stuff that people use to beat up David Pimentel.
You can't just wave the magic DDG wand and have your ethanol turn green...