Actually, I think that’s exactly what you can do.
If that is true, then I would conceed. Though very reluctantly.
As Smoke Bombs seriously has some problems as it is currently written (you must redirect damage, you cannot choose not to, and you cannot (without outside means) destroy the card) I say any way you can game it is AOK with me.
I would argue that you can not choose to NOT be the hero with the lowest HP, so you HAVE to redirect it. If you are all tied, then you can choose to redirect it to yourself, and it would take -1 on damage, but you can’t decide to not be the hero with the lowest.
Honestly, though, I can’t think of many instances in which you would WANT the villain to deal more damage to you. (I know there ARE, I’m just saying there aren’t many, and taking 1 less damage can be pretty useful.)
Not for Wraith specifically, but if the villain’s dealing cold damage to Absolute Zero when he’s the lowest hp hero, you definitely won’t want it redirected away from him and reduced by one. It could turn, for instance, a +5 hp heal into a -4 attack.
The problem being that Smoke Bombs has a tendency to even out the heroes’ health, so if it’s cold it will eventually hit AZ and he’ll be at the top to be hit by all the other cold attacks.