interesting points
That said, I read your link and it certainly doesn't look to me like the distillers grains are, as a whole, failing to find an economical niche.
With re: to pricing - all feed products are expensive, no? Relative to corn, distillers grain appears to be cheaper (again, inferring from your link).
That said, there are going to be hiccups incorporating distillers grain into the food cycle, but I think it's safe to say food prices would be higher overall if this product was merely discarded instead of marketed for consumption.
Distillers grains is not some new fangled frankenfood. Pretty sure its been fed to livestock for a long time. There is some credible evidence that distillers grains are, on a whole, better for cows than corn, because it's more fibrous and less starch. That might be speculative though.