In defence of the Volvo, Tax is 180 ish a year so I'll give you that but I've never found a problem driving around town, never had a problem parking in town either (even in my stretched limo) as spaces are designed to fit normal cars, Junctions have to be easier in a quicker car surely?
.... and the barge of a Volvo gets me 60mpg on my rush hour commute (bizarrely better than a smart it would seem) with a hell of a lot more power at the dispersal of my right foot, a great deal more comfort, a better ride, more toys, an infinitely better stereo and whole lot more safety.
So no, I'm still not totally convinced by the whole city car argument (although I'd really like to be).
Drive one! The arguments I made only seem real once you have driven one. Let me put it this way. When my smart was in for a repair I was given a Renault Clio for a few days. I can't tell you how cumbersome the Clio felt! When a car is so lithe and agile it makes a Clio seem awkward - then surely there is a quality there that can only be understood by driving one.
Another almost party trick of a smart is being able to U-turn. And capitalising on it. Not just when you accidentally are going the wrong way, but when you purposely go the wrong way to easily join a traffic flow then executing a U-turn (where in anything else it would be a 3 pointer that no one will give you time or space for) to regain your direction of travel. Until you have experienced this, it is hard to believe how useful it really is!
Other points you raised. They have plenty power enough for the intended use and the early turbo models have a wholesome grunty torquey delivery that makes them feel much quicker than they actually are. Allied to excellent visibility from a highish seat position, they are formidable in the city. Then there are the gaps they squeeze through that nothing else can. And I do mean nothing else. Toyata IQ? Forget it - it's the width of a bus. Call it IQ but it still aint smart! Anything quicker is a waste in town. But you already know that...
Fuel. No way carving around the town are you going to match a smart for economy. The laws of physics don't allow for it.
Comfort? Conceded to the Volvo, but agility is much more FUN!
Toys? Of course you have them. But can you buy the Volvo new for a 4 figure sum? Smarts also hold their value - and in there is a king size clue as to how highly regarded these cars are.
So, go give one a whirl. Here are the three most likely outcomes.
1) Blown away by it. Utterly charmed by its character. And the robust quality it exudes.
2) You can see the worth but finding it a little idiosyncratic to drive, you appreciate they take a bit of learning to master and get the best from. A bit of a challenge then, but when mastered, a car with no real competitors.
3) Hate it. It's possible. And if that happens, so what? Go back to the Volvo, praise yourself for being adventurous enough to have tried something new, and enjoy the Volvo all the more for having its case endorsed.
Why wait? The dearth and cost of all fuels will soon see us all downsizing at some point. How much better it feels to choose to do it than wait and be forced..
Quit your jibber-jabber and get an old bus of a Volvo. 
