My first set had a smoke unit like that. The unit melted down and my dad simply cut the wire to the heating element and rerouted the headlight wire so I could still run the locomotive. I always thought it was a stupid idea to make a smoke unit out of plastic with a heating element inside... The Lionel Postwar 746 J class locomotives had one of the first liquid smoke units they made and it's a similar idea with the sealed plastic unit.
I've taken those apart before by breaking the bottom seam, but they are a pain. I think I just permatexed them back together. Way back in high school I replaced the resistor in one (don't know what kind because the train shop sold it to me). That one didn't work out so well because I remember flames shooting out from under the pilot after the plastic melted. That one stunk up the basement very well. You are right that they smoke well.