I really like that this quest is so challenging. Thematically, it should be a very challenging quest. Personally, I won't care if I never save Lake-town from being destroyed, but I want a decent chance to defeat Smaug. (I'm not as uncaring a human being as I made that sound.)
However, I have heard that it is nearly impossible to defeat Smaug, given the difficulty of the quest.
Since Smaug is immune to player card effects, I think that the way I'm going to defeat Smaug is to create a custom "Black Arrow" objective card that, under the exact right conditions, can take Smaug down.
What about something like this:
The Black Arrow - Objective
When Revealed: Attach to a hero with Ranged. Otherwise, discard this objective and deal 1 damage to Lake-Town.
Counts as an attachment with the text: "Action: If attached hero is attacking, and his owner has no cards in hand, discard this card to make him attack +20."
Shadow: Place 2 progress on the current quest and resolve the "When Revealed" text on this card.
I know it makes killing Smaug a lot easier, but I think I'm going to need it.