People have known cigarettes are carcinogenic for quite a long time, certainly by the late 1980s. (See Allan Brandt's Cigarette Century for a long discussion. The short answer is that people had a pretty good idea by the 1950s and certainly it was well-known by the 1980s.)

Smoking cigarettes increases your lifetime cancer risk, as we know. But smoking cigarettes in an environment filled with radioactive particles increases it dramatically (they are synergistic effects — the radioactive particles attach to the smoke particles, and get pulled deep into the vulnerable lungs).

It is of mild interest that there were major public health educational efforts along these lines in the mid-1980s, specifically because of the connection between domestic radon gas accumulation and cancer. Doctors in particular were given pamphlets from the US Environmental Protection Agency emphasizing the synergistic effects of cigarette smoking plus a radon-rich environment. Radon is carcinogenic by itself, but the combination of radon + cigarettes raises the cancer rate dramatically — it increases by a factor of over a thousand.

(My wife's dissertation is on the history of radon and risk assessment. For the factor of over a thousand, see the Environmental Protection Agency's pamphlet A Citizen’s Guide to Radon, May 1992. The first edition of the EPA's pamphlet was published in August 1986, though radon was an issue prior to that.)

Anyway. I don't know what inspired the authors of the graphic novel to include that sort of thing, but this was certainly something being talked about in the mid-1980s. From a plot point of view, the goal, if I remember it, was to guarantee that anyone who contacted Dr. Manhattan would get cancer, as an attempt to frame him as dangerous, so increasing the risk of lung cancer from smoking to a "sure thing" seems to have been in line with the plot's "villain."

This article provides a pretty comprehensive overview of the various trials that have played a role in determining the link between cigarettes and lung cancer. In short, the first suspicions that there was a correlation between smoking and lung cancer came in 1898. In 1912 the first monograph was written suggesting a link between the rising number of smokers and the rise in lung cancer cases. By the middle of the twentieth century the link was proven through four types of study: population studies (large scale statistical analyses that showed that lung cancer patients were far more likely to be smokers than non-lung cancer patients), animal experimentation (exposing animals to various forms of tobacco smoke and residue), cellular pathology (observing the effects of tobacco smoke on individual cells or clusters of cells, outside the body) and chemical analysis (identifying various chemicals in cigarette smoke that were already known to be carcinogens).

To clarify the radiation-laced cigarettes plot point, it was part of a larger plot by Ozymandias (Adrian Veldt) to get Doctor Manhattan to leave the planet so that he could complete his scheme. It hinged on making the public believe that Doctor Manhattan was dangerous, that mere proximity to him was enough to cause cancer. In order to do so he exposed several people from Doctor Manhattan's past, including Janey Slater, his ex-girlfriend, to various forms of radiation to give them cancer. Slater weighed especially heavily on Manhattan's conscience due to their past relationship. The reason he specifically used radiation laced cigarettes was that he needed to be absolutely sure that she contracted cancer. Using regular cigarettes increased the chance, but in order for his plans to succeed he needed to be completely certain.