The smoking is very offputting. Tobacco use has a hugely negative connotation these days (as I've found out in my nicotine research). Unless she's deliberately supposed to be invoking ideas like an embittered old smoke-stained hag and frustrating reader identification, you should definitely switch to tea or something.

From a throwaway line in the ending, I assume we're supposed to find her embittered and flawed with smoking as a prop. But it doesn't really work.

Overall, an interesting exploration of a Ponylarity and Fun Theory. It's pretty good but somehow I feel a certain lack of narrative drive from chapter to chapter aside from the question of 'what will Celestia do next?' Not sure I'd say it's better or worse than the other rationalist MLP fic. (I enjoyed Fallout: Equestria much more overall.)

That said, I am deeply amused that just 2 days ago I commented that MLP would make a good post-Singularity utopia and satisfy many of the suggestions of Eliezer's Fun Theory... and here it already existed. If only I had known!