I was raised with the whole "smoking is the devil, nicotine is evil" mindset, so personally, I would make this as much of a non-issue as possible. She's know it's not healthy. I would treat it like she's started eating a hot fudge sundae on a regular basis. Neither habit is good for your health, teeth, or pancreas, but if that's the one thing she needs to do to rebel, I would say you're lucky. My mom was an outstanding student headed to Johns Hopkins to be a doctor, then decided she needed to rebel and ended up pregnant with me. She's happy with her life, but for obvious reasons that's probably not what you want with your daughter.
It sounds like she has a lot of the responsibilities of an adult at this point and that she's handling them well. Just like she has earned the right at this point to eat what she pleases when she's not in your home, I would say she has probably earned,
through her responsibility and good grades, the right to choose whether she inhales tar, ammonia, and carcinogens into her lungs occasionally when she's out by herself. It's certainly not a smart choice, but at 17, I think it's wiser to pick your battles, especially since she will be gone soon. I doubt you could truly stop her from smoking even if your wife forbade it, if she had her heart set on it.
Don't condone it, but don't make a big deal out of it. I think it's great that she told you on her own, and I would certainly encourage you to maintain and improve that kind of a relationship.

I never felt like I could fully open up to my mom about anything because she didn't know how to pick her battles properly with me, so I'm envious of anyone who can confide in their parents about something like that.
Just keep in mind that smoking is not necessarily evil, even though it's very hard to quit after getting hooked. And when was the last time you heard of anyone ruining their career or family because of cigarettes? I'm sure that it COULD happen, but cigarettes are not nearly the same as alcohol, ......., ...., etc. They even seem to help some people concentrate better. Again, I would treat it like other health risks we all do to ourselves, like eating too much fast food or sugar, lying on the couch too much, or stressing out too much.

Don't give this any more attention than it needs, and be sure to praise her good grades and let her know how proud you are of her for working so hard. Don't alienate her! Whatever her reasons for smoking, her life will probably be significantly safer if she knows she can go to you both for anything!