I've got the book in front of me and there is nothing under the entry for smoke launchers to justify your interpretation of them. LOS is not mentioned once. In fact, the only effect listed is to give the vehicle a 5+ cover save.
Across wargaming, smoke is usually represented by a cotton ball on *top* of the tank. Your rules stretch is not only incredibly lame, it also really doesn't truly address the issues of the BA. This topic has made a mockery of this thread. Because even if what you wanted to do was allowed, other armies would get the same advantage.