That's definitely not a midget. Might be a tranny, but not a midget.
The balloon thing - there's a couple of different aspects. Suspense and personification are the most common.
The person gives human attributes to the balloon. It takes on the qualities of a person and they actually care for it (a little warped, I know) - think of it as you'd think of a really pathetic person caring for his blow-up doll and you've just about got it.
Then there's the suspense aspect, poppers vs. non-poppers. Usually the non-poppers are the ones who really get into the personification thing. The poppers are into the whole suspense of how long the balloon can go without popping and how much pressure, squeezing, etc it can take before it pops. This is tied in very closely with the suspense aspect of orgasm with a partner. You tease her, nibble her, twiddle her, pump her... but you're never really sure how much she can take before she goes over the edge and has an orgasm. When the balloon pops, it's a rush much like a partner having an orgasm.
Do NOT mix up the poppers and non-poppers. They're very distinctive groups. If you're going to make sites *for* the balloon niche, separate poppers/non-poppers and speak to them individually. Non-poppers really appreciate it if you warn them that there will be popping photos/vids shown, so they won't accidentally see those. To them, popping the balloon is actually killing it. (Like you'd kill a person.)
That just brushes it, it goes into much more depth like types of rubber/latex/mylar used to make the balloon and stuff (which is all a sensory/textile preference - what feels most 'real' to someone), but should get you started.
One big hint with smoking - don't ever show someone with a smoking fetish a picture of a girl sticking a cigarette in her pussy. It's NOT about that. That is disgusting to them.
For the smoking people, it's more tease than sleaze. Keep the cigarette in her hand and her mouth... don't put it in her pussy. Blech.