There are no "conflicting rights" here. The employer has the right to hire and fire anyone he/she wants.
In Michigan and 19 other states, employers have the legal right to fire anyone, as long as they don't violate discrimination laws (for age, gender, race, religion, disabilities, etc.).
There may be no rights conflict but there's a definite double standard.
Also true is that adversely affected employees can sue the employer for firing without just cause. The employer should focus on job performance issues.
On a personal level, I would not want to work for a company that 'enforced' lifestyle choices, or in this case, addictions. Targeting smokers as a group is no more palatable than targeting ethnicity or race (either pro or con).
Once you get away from individual job performance, you are on a slippery slope indeed. Affirmative action, now affirmative life styles. What's next?
Really? So they can fire a 30-year worker the day before he becomes vested in the company pension?
Can they fire a secretary who won't sleep with the boss?
How about a worker that votes Republican, contrary to what bossman tells him to do?