The OP has some points. Offensively, Marcus hasn’t really improved. He “is what he is” at this point in all likelihood. He should be paid with that in mind, rather than on potential.
But, if we can fit him in our budget, he’s an important player. He’s like a smaller, less efficient version of Andre Iguodala (since he joined the Warriors, anyway). He plays great defense, moves the ball, and is a guy you want in there in the fourth quarter.
Iguodala is a far better player than Smart and Smart will not be on the floor next year at the end of games unless he's taking Brown's spot. While he moves the ball, he also has the second worst turnover rate on the team to Theis who is well known for having turnover issues.
Smart has the lowest total shooting percentage of anyone in the NBA who has played as many minutes, shoots worse in wins than losses, and shoots worse in the 4th quarter compared to the rest of the game. He also has the worst assist/turnover ratio of the three primary ball-handling guards. His fans really underplay just how bad his shooting woes have been. They also overstate his +/- numbers consistently. He is playing a lot with the starters and there is a clear divide between that group and the rest of the team. He plays a lot with the starters because Morris cannot stay on the court and Smart has more positional versatility than Rozier in a defense that switches constantly.
Smart is a very good defender, but we have many very good defenders this year though none have the grit he does. Right now, Rozier has passed him overall as a player and even has a better defensive rating although that is a suspect stat. With Hayward coming back, I do not see how we keep Smart assuming the player FA market is not frozen because of severe league-wide cap constraints.
That being said, I do not agree with the OP either. Smart has improved recently and has half a season and the playoffs to go. He is among the top 10 bench players, as is Rozier, for minutes played and I am sure the audition is not over. Anything is possible, especially if the price is right.