Well one thing is for sure: if Smaug had lived then the Lord of the Rings would be quite a different book. Smaug could have, for one thing, killed Bilbo and taken the Ring. He could then have eaten the Ring or kept it with his hoard, or returned it to Sauron. Either way Sauron would probably have regained it. And Bilbo may not have returned from his adventure, meaning Frodo would never become his heir!
Supposing that Bilbo had returned though, and that Smaug had not been killed and the Fellowship of the Ring had still set out years later, I would think that Sauron would be able to persuade Smaug to help him. If there's one thing we can learn from the Dark Lords it is that they will promise practically anything to a useful ally. A new hoard of gold? An entire kingdom? Smaug could certainly have done a good deal of damage, but I imagine he would be taken down by an archer or perhaps an eagle eventually.
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...where the instrument of intelligence is added to brute power and evil will, mankind is powerless in its own defence.
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