My 2 cents, as respects to Lionel PostWar steamers:
In the past I tried liquid, produced OK smoke at first but died down quickly. Also, did not last as long as a pellet.
I'm finishing up my supply of K-line pellets, bought when full bottles of original Lionel pellets were going for $20-$30 each (Now about 1/4 - 1/3 that price). Happy with the K-line option, nice smoke rings produced just like the original Lionel's.
I do not find any loss of function from original Lionel pellets (even if some are now powdered) and, IMHO, smell the best. A nostalgic smell.