Smokers (nonsmokers can weigh in, too), would you consider it rude/offensive?

I am an ex-smoker and I would not have considered it rude when I was smoking. It's quite right for a child to make such a statement and quite right for a parent to acknowledge that they are correct. It would not matter if the parent apologized for the child. If the parent did choose to do so, I would hope that it happened out of earshot of the child.