After a little research, I found a brief reference on Wikipedia* to the following:
methanol is added to denature the product, which essentially is intended to make it too toxic to be drinkable
This would seem to indicate at least slight toxicity – nothing significantly dangerous for an open-air burn, but which may create a toxic residue when used in a smoking-type application.
Even so, it's unlikely that "Sterno Smoked" food would be any more toxic than food slow-cooked in a cheap non-stick pan, for example…
Given how "generally unsafe" your rig sounds in terms of avoiding potential ignition of the wood chips, or insulating the surrounding environment from the heat buildup, I wouldn't recommend it. Smokers aren't that expensive, and the overall regulation/predictability they provide will do wonders for increasing your smoking skills. Once you are more experienced, it'll also be easier to think up optimal improvised smoking rigs for the inventor/survivalist in you.
(* Source: http://en.wikipedia.org/wiki/Sterno)
deano.com 