With a 17-18 yr old protag, this sounds more YA than MG/kidlit, and in that case there isn't any problem with him smoking. Even if he were much younger it wouldn't be a problem, especially with this being an historical.
I have to agree with you on this one. I haven't read the book, but if smoking's the only suggestive action the MC does, believe me, I've read far more edgier stuff, some of it written by many of our regulars here, both published and unpublished.
I can understand you're feeling torn though.
Plus, since my mother's a smoker, and my Grandma used to be (Over 10 years clean), I wouldn't allow it in my own house, when I have a house someday...
But speaking strictly as a writer, I'm all for doing whatever it takes to make the story you're telling feel true and sincere, even if it means the characters say or do things that don't mesh at all with my sensibilities.
I'm not familiar with Mad Men (Book or Movie? Or Both?) but as long as it wasn't the brainchild of Quentin Tarantino, I think it might be safe for 12 and up, given on how you've described it.
Besides, not every kid imitates what they read exactly, at least not the really dangerous stuff beyond simple pretend play that all kids do.
That's one of the pleasures about books, we get to experience all the radical dangers and perils, without being in physical danger, and except for maybe the occasional nightmare if it was a particularly mind-shattering ride, we're still safe at home, or wherever we are when we're reading a good book.