Using a lighter weight oil is not recommended for the older cars...they were designed to have that oil of that level of viscosity so that oil can be retained on and in between the contacting surfaces when you start the engine up cold. Going to a lower viscosity increases the oil's ability to drain out of these areas and making them more prone to metal-to-metal contact.
The increase in oil loss is what I'd expect with the change for similar reason. If it'a less viscous, more can slip by seals and o-rings and be lost. 1.5-2 qts over 3000 miles isn't bad in general but Toyotas are typically better than that. The smoking exhaust is indicative of oil being burned if it is a bluish color. A compression test would tell you if it is due to worn valve seals, worn piston rings, or a bad head gasket. Go to an online repair manual like at
www.autozone.com and check the procedure for doing this test. They also will lend you the test gauge...should be pretty easy on yours since the plugs are right on top.