Dont know if a smoke grenade would do the job properly, maybe look into a more controllable source, if possible.
As to where the smoke would go IGE, I'd expect it to go anywhere and everywhere! The tip vortices should move outwards and would be expected to form a circulation just outboard of the rotor tip, hence shouldn't be of to much interest in your tests. Most of the 'inner flow' should move outboard as well, some feeding into the tip vortices circulation. However, some of the inner flow will be drawn up through the centre of the rotor, which is then drawn back through the rotor again; the so-called 'fountain effect'. There is also the issue of the root vortices. In Ray Prouty's books, he suggests these could come together to form one big one that then wanders about unpredictably. Finally, of course, all these effects also affect all other parts of the rotor wake!
All of this could mean that the pilot's view could very well be obscured adding to the idea of being able to control the smoke (even if its being able to bat a smoke grenade away!!).
As a rule of thumb though, the ground layer is around 10-15% of rotor diameter at its thickest point, thinning as it moves outward.
Interestingly, as you'll be using hoists etc., you may be out of any appreciable wake effects. I'm guessing that is what you're trying to find out. Just make sure you've got plenty of good video gear filming! Try a few different azimuth positions, especially if there is wind. High-speed cameras are great but damn expensive.
End of ramble.....
One thing's for sure though, you'll have a lot of fun doing it!