I received an interesting response from the feedback I sent Microsoft yesterday on the SMO MailServer bug. They closed the bug with a (Postponed) note on it, and included the following comments:
Thanks for reporting your problems configuring mail servers programatically. Additional thanks for sharing your workaround code.
I have submitted this issue for a KB article to assist those that find themselves in the same difficulties as you did. Additionally, I have included this item in a list of those we hope to address as part of a feature completeness push for the next release of sql server.
So, the workaround I posted yesterday is the way to handle this particular problem.
Allen