I have tried to found solution to make smoke in blender, and this is one way to do it. I dont know has anybody tried this kind of method before.
Sphere used as particle object(dupli verts), and maded halo like material for it. Advantages of this method is that you can actually have shadows on smoke which is quite critical part to achive real looking smoke. You can control smoke behavior much better than with halos.
Disadvantages are huge rendering time and some artifacts which may shown when particle objects meets each other. With ZTransp, objects borders may get unwanted shading also(i.e Highlights there where should be transparency).
Well , enough talk. Just watch it , and give some C&C : http://www.youtube.com/watch?v=sLgPVp6B_Co
Hope you like it