Peter,
 
I'm a bit baffled by your concern over the "smoking" problem in this film,
because I'd take a different perspective.
 
1.  Is Stern's comment--"I've smoked half of it..."--really a nod to today's
health consciousness?  It needn't be taken that way. No matter what we've
come to know, and how we've become sensitized to the issue through scientific
research and education, as well as changing social attitudes, people who
don't smoke have always been bothered by smokers--whether or not it's been
to a degree of physical illness. Stern could be taken as a man with some
physical tolerance to smoke, with the attitudinal tolerance that would jibe
with the times, and yet comfortable enough with his boss now to mention the
latter's excessive habit jokingly.
 
2.  As for the concern over the discrepancy: the insignificant "problem"
of secondary smoke inhalation on a personal level, juxtaposed against the
almost humanly ungraspable obscenity of what's issuing from those incinerator
smokestacks.  One may worry over whether audiences, now or in posterity, are
equipped to make the distinction and not to equate them. But for those who
can "get" it, the juxtaposition may prompt us to face both an awful fact and
a saving grace, both compounded into a truth, like it or not:  In the midst
of the most awful circumstances created by human agency, we're heir to
distractions and discomforts of no more than passing significance. You can
be sure that the Jews in the camps living under conditions worse than Stern
and Schindler's workers, were conversant with the irks of human-behavior-
as-usual, even inside an atmosphere of misery and terror. It's what keeps
us going, sometimes, despite the odds.  And on the perverse obverse of that
coin--not the blackly humorous but the pure-terrible side--our habit or
human tendency to focus on those irks-as-usual in everyday life is often
what divorces, distracts and desensitizes us sufficiently from the consequences
and significance of our larger actions, so that they can become unthinkingly
monstrous. No matter what the circumstances and how able the spirit the flesh
can be a defensive weakness for the miserable oppressed, and a crippling
disease for those who create their misery.  This is not anything in the way
of an explanation for something of the Holocaust's magnitude, but it may be
taken as a contributing part of the experience.
 
...For those, again, who might misinterpret--what's the answer? One thing we
might do is pull our punches, dilute the communication. But we might also
have an obligation to forge ahead, communicate with those who can understand,
...and begin to see to it that those who can't begin to get equipped with
the tools for comprehension themselves--one aspect of that being not to ob-
tain *all* our information on historical events from some feature film, no
matter how well-intentioned and commendable it may be.
 
  Before I slip off my soapbox, let me leave for the weekend,
                                                           Jeff