Well, the one thing it wouldn't have done is "blown Sgt Pepper out of the water", at least not commercially, anymore than Pet Sounds blew Revolver out of the water. IMHO, despite the strong Americana themes running through SMiLE, it would have still been more of a success in places like the UK and Europe than it would have been stateside.
Yes, maybe, but IMHO, the January 1967 release of Smile would have blown the Beatles minds and severely altered the product they might then have released as Sgt Pepper, thereby blowing it out of the water.
I agree, though I'm not sure "blowing it out of the water" is the most accurate way of putting it. I do think that Pepper would have been a different animal had Smile come out in January. How it would have changed, I'm not sure, but we all know how impacted The Beatles were by Pet Sounds, and hearing Smile would have only made them up their game that much more.
Jcc is spot on too, in that Smile would have forever altered the music-listening public's perception of the band. Even with the notoriety and acclaim that Pet Sounds has garnered them over the years, the fact is that most people still think of them as the band who did "Kokomo" and all those surfing/cars/girls songs. Nothing wrong with appreciating that aspect of them, but as we all know, there's a lot more to the Beach Boys than that. The band deserves to be mentioned in the same breath as the Beatles, the Stones, etc., and Smile being released, I believe anyways, would have gone a long way in getting them there.