Ok now that we covered the historical aspects, lets go over gameplay.
First off, there will always people who smoke their own teammates for giggles even if you did limit the smoke grenades. 2nd, smoke tells the enemy where you are at, if You've ever played WW2ol you will know that smoke IS NOT YOUR FRIEND. I've only seen smoke work twice in ww2ol and it was ograsmic. But that was twice in 5 months of playing. 3rd. Smoke attracts grenades especially in city maps. For example on Odessa, if the russians tossed a smoke near the tower, what do you think the germans will do? They will throw more grenades then you've ever seen in your life, if you don't believe thats true you have no clue what you are talking about.
Basically the benefit of smoke is small, and it would only lead to gameyness, complaints, tks, mayhem, and a basic degeneration of realism.