The problem I find with Festival of Thrills is that it's a relatively small event, but how it's advertised makes it feel like it should be a big event similar to Mardi Gras/Oktoberfest.
I'm not a fan of The Smiler theming in front of Wicker Man. I think there are better and more subtle ways in which they could have implemented the 'takeover' without shoving cheap and tacky theming and loud audio in front of the existing rides.
@davestones ideas are more what I would think would be suitable. Have Smiler banners around the park*, heavily theme/dress up Towers Street, make use of the stage on the lawns, themed food available in different outlets, street entertainers around Towers Street in The Smiler attire*, some form of outdoor entertainment in Fountain Square, and obviously have X Sector as a big focus. In terms of the 'takeover' of individual rides, I would have The Smiler logo or little bits of Smiler theming hidden around the other coasters, make a treasure hunt-style task where guests have to find these bits of theming to win a prize, it could be as simple as winning a pin badge, or a free return ticket for an off-peak day in September (a la Big Six Challenge event).
At present, the event feels so cheap to the point there's literally no point in running it. I feel the cheap and tacky way they've had to implement this event, does more brand damage than having no event at all.
Either invest more to make Festival of Thrills a great event, or keep the pennies used at present for other events in the year.
*Edit: I understand that this event does have some banners on TowersStreet and some roaming entertainers, however, it is still a very sparse event.