I'll try my best to adress all your queries:
I would recommend a lightweight diesel, hybrid cars so far have been more damaging to the environment than they can ever make up for. They are a false green technology, as they start with an underpowered car, so it needs to work harder to get anywherem then pile on a load of extra weight it doesn't need.
I have a wonderful diesel fiesta, it costs £30 to fill up, and the fuel will last me weeks (and I drive quite a fair bit!). Select a diesel car with a turbo as this increases the power you get for your fuel and carbon emissions, therefore reducing the fuel you need to move and therefore emmisions in your journeys!
If you want to run a car on bio-fuel or veggi oil, I recomend either a VW or a Pre td5 land rover, as both are built to run on basically anything you put in them, and even modern VWs will allow you to run on 50% biofuel without comprimising your warrenty. The pre td5 Land Rover defenders will run on basically anything, even banana oil, they were designed that way with our army in mind thinking it would be useful to be able to survive without proper fuel.
And as for why biofuels haven't caught on, well, all of the fuel sold at supermarkets is 5% biofuel, thats why its nearly always 5p cheaper. But some cars aren't kitted up for biofuel, they are tuned specifically for the local grade of fossil fuel, I recal an expermient saab did, where they remapped a sport saloon of theirs matching it to bioethenol and it out performed the fossil petrol car as ethenol has a higher octane rating, so its not doing badly, but its being held back by availability and the fact that the government gets too much of its income from fossil fuel tax.
Biofuels caught on in Brazil because thier governments took the initiative to make the change as they saw it as a benifit to their economy, there was a fuel crisis at the time and they thought fossil fuel would run out the next year, and the've done perfectly fine on biofuel since.
The car you choose you must also decide what you are doing with it, as a 1.4 turbo diesel will easily do 80mpg, a much bigger 1.9 turbo diesel could get a better mpg than the smaller car if they were both carrying a lot of weight. A bigger engine may do slightly less mpg in the long run, only 5mpg difference maybe, but adding weight to the car will change the mpg less on the bigger engines. For example my 1.4 td car may be reduced from 80 to 45mpg when I fill the back of the car to the ceiling with wood, but my mates 1.9 td golf estate will fit more wood in and might only reduce the mpg from 75 to 55mpg. For a town car or family car you'd probably not fill it with wood tho so you'd probably want the 1.4 haha.
Hope that helps :)