Could Smoked Salmon be used for this recipe?

Assuming you mean lox, it certainly could work fine, though it would not be traditional (which, of course, has no bearing on taste). Traditionally the recipe would use leftover fish, and usually flaked fish or fish that would easily break up in the soup. The only problems I see with smoke salmon is that a) you may have to cut it up into little pieces to be able to easily eat it and b) it may actually cook in the hot broth. Probably doesn't effect the taste, but it would likely take on a different consistency than usual. But try it, what's the worst that could happen?

Yes, but I would not do Step 1, "rub with lots of salt." The smoked salmon you will use is probably seasoned already.