General Points: A) The Culture of the school will change for the worse, B) This act is not in the best financial interest of OWU (which, like it or not, is also tied to the best interest of the students).
1) OWU accepts more smokers than it does people with asthma and other lung problems.
While people with such problems should not be overlooked, admissions should be more concerned with the number of students affected. 70% of OWU funding is from Tuition, which is how reliant the life of the school is on admissions. For this reason we ultimately care more about large groups of students than smaller ones, because favoring larger groups over smaller groups is simply smarter regarding OWU finances. I think the stats I saw online - although I can't verify them - is that 15% of students accepted smoke, while a much smaller number (as in less than 5%) have a serious lung problem. Also note that maintaining the status quo would not change current policy and allow us to keep current funding as the persons with poor longs continue to apply knowing smoking is allowed on campus.
2) Admissions Image
Banning smoking gives us a more conservative image. As colleges outside the realm of Evangelical schools are usually assumed to be liberal, giving us this conservative image puts us in a place between Religious and not-Religious, especially considering our current affiliation with a Church body. It is definitely illogical to assume that taking this step back will lead to other steps back; however, people are stupid and often illogical, and might possibly make the assumption that this might lead to other reforms (like mandatory chapel service or banning alcohol?), thereby decreasing the number of applicants and altering the overall culture of the school.
3) Muslim and Baha'i students
Students of certain religious affiliations can only partake in smoking and do not have the possibility, according to their worldview, of consuming other drugs. Think about the many International Muslim students we accept. Many of them smoke before coming to campus; banning smoking would harm our image among the countries they come from, as well as decrease the overall religious diversity of the school.
4) "Seemingly" Decreased Admission standards
Assuming less applications are received, as my above points suggest, we'd have to accept more applicants to make up. There's this thing in admissions where Colleges accept a large number of applicants (for OWU its 55% of first-time, an addition 9 to 10% of transfers) knowing that only a much lower number (for OWU its about 20%) will enroll. Because we'd have less applicants our numbers would increase for the initial acceptance; large acceptance numbers are typically characteristic of larger state schools and institutions of a poorer quality, which might lead to smarter students overlooking OWU (especially since we're still trying to rebuild our image from the terrible presidency of Wenzlau).
The obvious counterargument is that applications would increase from non-smokers and those who hate smoking; however, I think most would agree that these would come from more conservative or typically American students. Ultimately this leads to less diversity in the school, and it's rather unrealistic to assume that non-smokers would make up for all the smokers that quit applying.