I'm guessing that the problem isn't the smoke pellets but the heating element. There is no way the smoke pellets would have a shelf life. The chemical, unless they were Lionel 1946 only pellets, is not prone to air reactions.
The 1946 pellets used with the smoke bulbs is very unstable and is used as a fertilizer and for nefarious reasons. The smoke pellets from 1947 on are basically a low melting waxy material. The main problem with the material is that it melts at a very high temperature and if you turned over the engine with the liquid in it, you could get a pretty substantial burn. It was also somewhat corrosive to the metal parts.
There are articles on the internet that have very good information on the history of toy train smoke.