Is
it permissible for a person who is a smoker to lead people in prayer?

Praise be to Allaah. 

People
should not pray behind a smoker if a better person can be found to lead
the prayers. If no one better can be found, or you come and pray behind
him and he is still a smoker, the prayer is still valid, in sha Allaah.
The majority of scholars stated that prayer behind a faasiq (rebellious
evildoer) is still valid, and if a person prays behind him he should not
be told to repeat the prayer, because of the general meaning of the
hadeeth: “Pray behind the one who says Laa
ilaaha ill-Allaah.” (Narrated by Abu Na’eem, 1/320;
al-Daaraqutni, 2/56).

 And
Allaah knows best.