I am a smoker who quit for two years, during those two years I know for definite I was more productive at work than after I started up again (foolish - lots of beer involved

). yes some smokers will work harder/faster to 'earn' himself his 5 minuter but do you want you guy rushing your custies windows so he can have a quick puff after? The other thing is that we all have those days when things are going wrong and its just doing your head in, the smoker is more likely to say bugger it and have a cig to 'calm down' (even though nicotine is a stimulant) whereas the non-smoker will just battle on!
As for prejudice, I think that if you are comparing two candidates of equal merit but one has an addictive behaviour that is likely to have an impact on productivity then you are not singling them out, you are making a sensible business decision.
On the other hand, Jack, do you still clean yourself? if so it might be worth going out for a day with the lad to see exactly how he is, or just put him with someone else.
the reason I say this is that if your best guy is an all out grafter he might have a lop-sided view of how bad the other lad really is and might have an 'if i can do it why cant everyone'.