Smoking Rivets are loose rivets whose vibration causes a black streak trailing aft. A smoking rivet is a corrosive deterioration of a riveted lap joint. This is the "other mode of failure" that is independent of rivet strength.
If the rivet is loose in the hole then shear loading is transfered to the next rivet and so forth as the loose rivet cannot be holding anything tight. In metals, the one rivet has failed in that it no longer transfers stress, but the joint may still function (although weaker) as the remaining rivets have taken the load. The load is redistributed among the remaining rivets. However, in composits load redistribution in a multi-fastened joint cannot be counted on and hence a single fastener failure in bearing constitutes failure of the joint.
Smoking rivets may be acceptable for continued service for short periods of time under the limited conditions outlined in the aircraft's structural repair manual. Smoking rivets, if not repaired, do incremental damage to the skin and structure.
General statements (opinion):
Blind rivets loosen more easily than solids. More prone to smoking.
Blind rivets are less durable than solid rivets. Inferior in fatigue and vibration.
Blind rivets should be avoided in inlets (unless used in the original design)
Blind rivets are more hole sensitive. Holes must be within tolerance.
Blind rivets should only be used in "no-option" conditions.
Blind rivets are avoided in pressurized skin applications with cyclic loading. Solids better fill the hole.
A blind rivet does not create the tight fit that a solid rivet does.
Boeing takes a 20% reduction in allowable fatigue stress for the blind vs solid hole.
"Postaccident testing conducted by Textron Aerospace Fasteners and earler testing conducted by Eurocopter consistently demonstrated that joint fatigue life of materials fastened with blind rivets is less than the joint fatigue life of the same materials fastened with solid rivets." NTSB Safety Recommendation A-00-46 Through 50. This safety report (Colgate-Palmolive accident) is what changed the blind rivet recommendations in AC43.13.
"With a loose rivet, all we have is a hole in the airplane with some trash rattling around in it, and it always enlarges the hole."