They had no chance seeing this smoke with the typical cloud coverage. You would have to be very, very close to actually see it and then you would probably see the island too.
The master of Itasca disagreed with your idea. He reckoned that the smoke plume was at least thirty miles long and was highly conspicuous to a distance of at least ten miles.
That's one of the reasons why I believe that they were more than 60 miles short when they thought they were "on top" of the island.
There are several reasons why I'm sure they were to the Nor'ard of intended track. For one thing, we know that the weather was a bit thick to the NorthWest but clear to the South.
That's entirely consistent with her having to descend to 1,000' to attempt to get visual with the island/ship/smoke. It also strongly suggests that they had not been able to note the exact time of sunrise of the upper or lower limb of the sun. Without that observation, and a precise note of the time of that observation, the 157/337 LOP was worse than useless. It was a trap.
At the locus the fair weather cumulus was variable in extent and height was described as "low" in the deck log of Itasca. Have a look for yourself at the log and note that "amount" is in tenths, not oktas. Times are ship's time. Earhart reported 200 miles to run at 06:12 ship's time and that's when Itasca started making smoke. Cloud was between 2 and 3 10ths over the relevant time period. In modern parlance we'd call that "few".
