JAM smoke shells are supposed to block AI view. Well it'd be JAM2 now... It should be floatin around the OFPEC addon depot.
As for the script thing you're talkin about, there is prolly a direct and indirect way to do this. The indirect way being easier.
indirect: We show the grenader shootin something and have the smoke and all. Except he never really shot anything and then we activate an arty script that drop a grenade or explosive object on the postion you specified. Then maybe depending on the grenadier's skill, the grenade would fall closer to the target with more skill and farther away with less skill.
direct: You guessed it, make the guy actually shoot something. I dunno how to do this, maybe the more skilled scriptors could do it this way.
I like the indirect way better, although on the battlefield, it would need some testing.
And I think there are some suppresive fire scripts in the editor depot. Or you could use some invisible targets and delete them and create/setpos them when in use. Or use the fire command. I don't have a good answer for this either. :-\