ugh, yes. smart objects in photoshop downscale way uglier than pure pixel images (even when rasterizing the smart objects after the transform), no Idea why.
The resizing algorithm set in the photoshop preferences (bicubic, etc) is applied when resizing smart objects. I have found that if I am unhappy with how one algorithm looks, I switch to another, free transform the smart object (but make no sizing adjustment) and hit enter. The object will be rerendered with the newly selected algorithm.
I found the settings, but somehow it's just still not the same. I now do the smart object stuff until it's all settled, than resize to 100%, rasterize and resize back to what I had set.