A turbine seal letting go would have caused the smoke to keep on going, even after he had avoided the ground.
I've seen engines overtorqued and overtemped but never seen a temporary smoke cloud like that from grabbing a handful of collective.
You know the flotation bags are packed in powder and inflated with nitrogen and you can clearly see the flotation bags have inflated during the dive towards the water.
Seems pretty clear cut to me - if its not the powder it is the excess nitrogen (cold gas under pressure) expanding and cooling the air.
It's a single-engined helicopter, if he has buggered the engine so badly it starts to smoke, how does he recover to the hover with no smoke evident?