Yep, it sure is.
There are two fire commands, differing the arguments they take. The easy one is just something like
loon1 fire "flare"
loon1 fire "smokegrenade" might work, dunno. Check the command references for syntax and hunt around the forum for examples.
In general, any line of code can go in a script or the on activation field of a trigger or waypoint - it doesn't make any difference.
I believe there is some way of recording a video of a game: not my field though. Use the forum search function, it has been mentioned once or twice.