The way activated carbon works is that there are all these tiny cracks and pores in the carbon bits that adsorb all sorts of organic molecules, usually by van der walls bonds (as opposed to covalent or ionic/electrostatic bonds). Meaning, it'll work fine with both vapor and liquid. But, the way it works in a physical sense is that you need to expose as much of the liquid to as much of the carbon as possible. One good way to do this is to pack a 1.2"-2" diameter, maybe 2-3 ft long column with the carbon and pour the liquid in, and wait until it filters through.
What you have would work well in line with carbon. You're like a mad scientist with your setup; I love it
. If you want, use regular water instead of carbon in that bubbler. When you fill it with hot water and bubble the ethanol vapor through the water, it's like doing a double distillation. The water will keep some of the bad organics in the water and out of the final distillate.
So yes, it would be better. Likely the carbon would work better than water.
