High performance two stroke engines scavenge the exhaust stream in order to increase power output. If smoke producing fluids are injected into the exhaust stream before the muffler i.e. right at the cylinder they will be drawn back into the cylinder and burned along with the ordinary fuel/oil/air mixture. This may cause the engine to overheat. That is, if you believe that mixing the smoke fluid with the oil/gas mixture and then running it through the engine would not be a problem, then it may be OK. Consider, however, that adding additional oil, essentially, is what can cause overheating.
If you install a smoke system, the fluids should be injected AFTER the tuned scavenging chamber, not before. A properly installed smoke system in the Top 80, for example, requires the injector to be placed just before the muffler rather than adjacent to the cylinder (the scavenging system).