Let us make the assumption that, one way or another, Smith is able to make himself available to play against the Lions.
The ARU then has to make a decision: is it better for the future of the game for the Wallabies to field the best available squad (which would probably include Smith), or is it better to maintain the principle that overseas based players (which Smith is, in reality, he will be going back to his long term overseas employer after the series) are not available for selection?
If I had to make this decision, based on what I know about the state of the game here, and the importance of us achieving success against the Lions, I would be voting for Smith to be deemed eligible for selection. Lord make us pure, but not just yet.
If that means that either Gill or Hooper misses out, well, they are just sacrifices to the greater good of the game. However, my guess is that there will be injuries, there always are. Or it might be that the three of them are in the squad. Who knows? Smith and Gill in the 22 for the First Test, then Smith and Hooper for the Second. The best of the combos for the decider. If it is a decider.