I am inclinded to agree with you, Deerhunter. I wouldn't ask someone to put out their cigarette. If I can escape the cigarette smoke then I'll do so. It's not like people are allowed to smoke in buldings (with the exception of their homes and possibly hotel rooms) so if you're outside then the oxygen to cigarette smoke ratio isn't so bad. Being outside, you have worse pollutants to be concerned about than someone's cigarette smoke.
The woman wasn't rude for smoking near a person considering that this was outdoors, but I do think it was rude of her to purposely blow smoke in his face. I can understand how annoying non smokers can be for smokers and vice versa. What I hate is when people who are themselves smoking, act like your smoke is bothering them. If I am smoking around people, I will make an effort to blow my smoke away from them especially if they are children, elderly people and pregnant women. Otherwise, no one is being forced to stand in the direction in which my smoke happens to travel.
My friend rented a billiard room for her b-day, and we were allowed to smoke in there. I didn't know that one of the girls at the party was seven months pregnant so I was smoking around her. As soon as she told me I apologized and moved away. She wasn't bothered by the second hand smoke, but it was more the principle which compelled me to move away from her.