I was doing this to make a mechanism where when my smoker is on it lets the smoke go up my chimney, but is blocked when my smoker is off, but this makes it impossible. If I move the campfire to another spot it works, but when I move it back, its still blocked. It seems the only way to fix it is to extinguish it, remove the hay, then reignite it, then extinguish it again, put the hay back , then reignite it, and with that it'd be better to make a mechanism to ignite and extinguish it rather than use pistons which I can't think of a way to do. I've even removed the piston and the block and it still gets blocked. Logging out and back in also seems to fix it.
Can confirm still bugged on 1.20.81.
However I would like to add that in multiplayer, some players will see the smoke rising, while others will not.