Well I don't see Smith resigning in Atlanta. He's had issues with the team and management for awhile now and he's all but demanded a trade.
I honestly think that Gasol as a center would still be very effective. I just don't think that he's going to work next to Dwight. I'm sad about that and I hope that I am wrong, because Pau was a key piece in helping Kobe and the Lakers go to back to back to back finals (winning 2 of them). I just feel that they (Dwight and Pau) kind of drag each other down. Howard has to play D on his guy and Pau's guy, as well as box out two guys. Pau is a liability defensively at PF as he's a lumbering 7 footer and everyone is much more athletic and typically stronger (kinda sad).
The way I see it is that Atlanta can trade Smith + fillers (like Morrow) for Pau and still be able to compete. Their defense would be brought down a small notch (Pau at C is above average defensively I'd say), but their offense would be better. Also Horford isn't necessarily a guy who has to be in the post to succeed... he's a fantastic mid range shooter who can also work down low. I think that they'd feed off each other.. it would also help with their huge size disadvantage (6-9 PF and 6-10 C).
I just think Atlanta loses a lot of flexibility and athleticism swapping Smith for Gasol. Their swingmen arent good enough since Marvin Williams left (he wasnt that good but is better than what they got), and I'm not sure Horford will be effective guarding PFs full time. Smith also helps court spacing even though hes a mediocre 3pt shooter.
Its definitely a gamble for the Hawks, and its probably worth it if you're trading for the Pau we saw in the olympics this summer. But he has looked old and slow this year, maybe if a 3rd team gets involved and sends Atlanta a decent SF
Minnesota could probably put together a better trade package for Josh Smith, but idk if they will risk it if he wont commit long term