From what I've been able to test, I don't think that smoke screens in OFP impose any limitations on the game's AI soldier unit's abilities to kill you instantly.
I've created a simple mission, called Hokey Smokes, to test this. Just copy it into OFP's MISSIONS subdirectory, if you want to test it, too.
The mission simply consists of you, as a NATO soldier, armed with 2 smoke grenades, versus a single Russian infantryman.
You start off in a niche behind a house. You're in a fenced in back yard. At a 45 degree angle to your right, in the yard's corner is a break in the fence, where the Russian soldier just happens to be standing, facing in your general direction.
If you try lobbing both grenades out in front of you and crawl behind the smoke screen to either attempt to escape or to shoot the Russian, he will spot you nevertheless and kill you with dead accuracy.
I've tried this under OFP version 1.40, both with enabling and disabling the SUPER AI difficulty setting. It makes no difference. The Russian soldier is as effective in targeting me behind a smoke screen as when I don't throw any smoke grenades at all.
So what are the smoke grenades good for? Well, obviously they can come in very handy when playing against human opponents in a multiplayer game - or maybe not!
After seeing this FAQ item, BIS' Ondrej Spanel sent me this official response:
"Smoke grenades are provided primary to add atmosphere to the combat, secondary as nice MP feature. We considered implementing effects on AI vision, but the problem was too complex for us and we were not able to solve it without using too much CPU power."
Recently, addon makers have developed smoke grenades that do block the AI's line of site. The is good news but the warning about smoke grenades in MP games still holds true.