When I started attending the KH regularly in 1969, the breaks had already been done away with (they had still been in place in 1967 when I started attending sporadically). The smoking ban didn't come into effect until 1973, so I don't really think that was why the break was done away with.
As I understood, the real reason for the break was that the Public Talk was originally intended to be a meeting mainly to attract non-JW's, whereas the WT Study was intended primarily for the membership. It was taken for granted that members of the public who came to hear the talk might not want to stay for the WT Study, since it wasn't geared for them, and the break was to allow time for those who were leaving to do so without disrupting the meeting. Of course, it also allowed time for bathroom breaks, chitchat and even smoking, but I don't think those were ever the primary intent, or there would also have been a break between the TMS and Service Meeting as well.
I guess that eventually, they realized that there weren't that many non-JW's flocking in to hear the Public Talk anyway, so any disruption would be minimal and the break wasn't really necessary.