Assemble the smoker by spreading 1/2 cup small, dry hardwood chips over the bottom of the smoker, then place the drip tray and rack directly on the chips. (To jury-rig a smoker, line a wok or disposable aluminum baking pan with heavy-duty foil and spread with dry wood chips; top with another layer of foil—to catch drips—and a rack. Cover the wok or pan by sealing it tightly with a lid or sheet of foil.)
Preheat the oven to 325°. Place a sheet of foil on the smoker rack; poke holes all over. In a well-ventilated area, set the smoker over high heat. When smoke rises from all sides, spread the onion over the foil. Cover and smoke for 45 seconds. Remove the onion.
In a saucepan of boiling water, cook the rice for 3 minutes; drain. In an enameled cast-iron casserole, melt the butter. Add the onion and cook over moderate heat until softened. Add the rice, cream and nutmeg and bring to a boil. Cover and bake until the onion is tender, 30 minutes. Increase the oven temperature to 400°. Stir the cheese into the onion and bake for 5 minutes. Season with salt and pepper; garnish with the chives.