I would agree with you guys, but my roommate pointed out some things that suggest the smoke monster became jacob's brother, not the other way around.
First is the obvious; jacob's brother died and his body has been on the island all this time, the smoke monster takes the form of dead people on the island.
Second, after jacob's brother is knocked unconscious he awakens to discover everyone is dead, the well has been sealed up and his body has been pulled to safety. Brother says it was mother who did it but I don't think she has the power to do all that. She said herself that she came from her mother which means she's also human. How could one woman kill an entire tribe of people? This episode takes place long before guns or any advanced weaponry was created.
Third, how do you explain the MiB seeing his real mother? She told him the truth which filled his heart with hatred and eventually lead to him killing his foster mother. The smoke monster is a master at manipulation and could very well have manipulated him into killing her, the first protector of the island before it went to jacob.
Fourth, when the smoke monster takes on somebody's form, it takes on it's memories and feelings. It was able to tell Ben what was going through John Locke's head as he died FFS. So when he's telling his story to Kate about how he once had a crazy mother, it could very well just be the MiB's feelings/memories that he is using to manipulate Kate into not wanting Claire to meet Arron.
Fifth, I know this is just a TV show.
I also just don't like the theory that the smoke monster isn't evil incarnate but instead merely a dude who got sucked into a bright light and gained super powers.