Assuming rumors are true and the Chiefs indeed gave up their 2nd round pick (and possibly another similar pick in the future), here is the reason why the move is a good one. It is quite simple.
Firstly, the Chiefs were going to give up a 2nd round pick for an unproven low talent QB prospect. Instead they used that same pick to acquire a proven veteran QB with playoff experience.
Secondly, Alex Smith is NOT Matt Cassel. Alex Smith has a wide portfolio of statistics to look at. Smiths last two seasons were very impressive. Cassel on the other hand spent one season with quite possibly one of the greatest offensive units to ever grace a football field... and his numbers still weren't that great.
Given John Harbaugh is a great coach, I can't say that I don't have any less faith in Andy Reid doing the same with Smith or much better. Chiefs fans should be very excited about this move. It is a very smart move that maximizes the value of the 2nd round pick.