I remember seeing something about biped-dragon costumes and how to blow smoke out the nostrils in a stream using a couple of small tubes and some kind of generator in the one-person costume. Can't recall the details, though.
Maybe you could fiddle around with baking soda and vinegar...they don't produce anything toxic in their reaction (hence their popularity for making volcanoes). I dunno. That's all I've got. It seems like a chemistry problem.
CO2 carteidge rigged to a trigger that allows short bursts and a tray filled with talc powder thats really fine?