Dave - I don't think you can use the defense action of Sting on Smaug. Also the spearman's defense response I think fails. Basically nothing works UNLESS it "buffs" your character. For example the extra axes you get from Sting do work.
I'm not familiar with easy mode but i suspect this quest will still be hard with the cards you have. Since the release of Dain Ironfoot, the designers have tried to keep the game challenging with his force multiplier considered for a 2 player game. Also it sounds like you have no Erebor Battlemaster or khazad! Khazad! for damage.
I'd say go straight to easy mode and play as if a phantom friend has a readied Dain cross board(+1 wp and +1 ax for all dwarfs).
I see your point regarding "Sting" and "Gondorian Spearman" (i.e., Smaug is 'Immune to Player Card Effects'). Dude, you're harshing my buzz.
I'm without Dain and the Battlemaster and Khazad, so this will indeed be a tough nut to crack without proxying something or other. I'd previously managed to defeat all four previous Hobbit Saga quests using just my 2 Core + Hobbit Saga cards (although I had to resort to easy mode to take down the Hill Trolls in the first scenario) and was hoping to get through the rest of the Saga this way as well. I'll probably take two or three more shots at it before I throw in the towel.