If I was really looking for a smaller car I would pick up a diesel Jetta or something along those lines. Great mileage, a somewhat normal design, and plenty of low end torque. It might not be as clean as the smart car, but it's still cleaner than most of the cars/trucks/suvs on the road. You can even run it off biodiesel/vegitable oil if you're worried about how clean it is.
The new diesel Jetta coming out is supposed to get over 40mpg city and over 50 highway, have a six speed manual or six speed DSG, be available in wagon form, be 50 state legal, and it looks like a normal car. It would probably be my choice over a smart car or hybrid.