While I agree with your and Rokke's information about passive and active radars, I have to point out that the FBI (our government) did not help matters by suggesting that what the pilots saw at 7500 feet was a bottle rocket or a flare.
I actually think it might be GOOD public policy not to scare the flying public with reports of missiles being shot at passenger planes without extraordinary proofs. The airline industry is only now starting to recover from the impacts of 9/11. Our economy does not need a hit like this. We have to remember that terrorism is not necessarily about killing people... it is about terrorizing them into changing their behavior to their detriment. If the terrorists can spread fear, uncertainty and doubt about the safety of airline flight, then they have succeeded.
Whether a missile brought down TWA-800 or a missile was fired at this aircraft, it remains a fact that shooting down an aircraft over 6000 feet with a ground to air Man portable missile is an extraordinarly difficult thing to do. If we accept that TWA-800 was shot down, it is a first outside of a warzone and it increases the degree of risk associated with passenger air travel only an infinitesimally small amount. Someone must be making a Risk-Benefit analysis and coming down on the side of keeping the public flying.
However, trying to obfuscate the report by suggesting an impossible "bottle rocket or flare" as a serious candidate for what was seen will only inflame those who know those candidates could not reach that altitude... causing them to dig deeper. Only the ignorant masses will give them acceptance: "the FBI said it, it must be true."
You are making assumptions here. According to this article the pilots reported the smoke trail was about a mile below them (they were at 7500ft) and the recording of the ATC transmissions proves the pilot said the smoke trail was halfway between him and the coastline. You've made the assumption that the smoke trail was near them at 7500 ft. That clearly is not an accurate assumption.