Boy am I ever relieved that this thread is merely about smoking...
Here's an idea. How about parents, who actually know their kids' temperaments and tastes, decide what's okay for their individual children to watch and talk over any issues that arise from that with said kids? I know, asking mom and dad to take an active role in the upbringing of their own offspring is kind of a stretch...but really, now, surely the human race is ready for this step.
Kids/teens/young adults are smarter and stronger than their parents' generations give them credit for being. Sheltering isn't necessary. Trust, understanding, and open channels of conversation are. But what do I know? I'm just some college kid.
I think that the merits of TH and LOTR far outweigh the smoking nonsense. There are lessons there about friendship, bravery, respect, pity, perseverance, hope, the potential of everyone, no matter how small/ordinary, etc. that are far more beneficial than a few scenes of Gandalf and some Hobbits and Dwarves smoking are harmful.