But he is well aware the veteran boss would also provide a great boost to the country if he were to return to the national team helm, having already succeeded in the role.
Smith and Dundee United manager Craig Levein have emerged as the early favourites for the vacancy, with both yet to comment on their interest in replacing George Burley.
Graeme Souness and Mark McGhee - who were both interviewed last time - have ruled themselves out of the running and Owen Coyle has reiterated his commitment to Burnley.
Jimmy Calderwood and John Collins both want the job, while Jim Jefferies says he is flattered to be linked with the vacancy but is waiting for an approach from the SFA before commenting further.
However, as far as Thomson is concerned, Smith is the ideal candidate.
"I think he is as good as anyone to take the job," he said.
"But I'm not the SFA board, I don't decide who gets the job. It's not my decision to push him in that direction to help the country out.
"But, if they were to pick one of the best managers around, Walter would certainly be in that category.
"He would be a huge loss to Rangers. He is a top manager and I'm sure I speak on behalf of all the punters and players when I say we wouldn't want to lose him.
"But he is at that stage in his career now where, if he fancies it, he might go for it. He might not.
"We've got him at the moment and we are quite happy. As far as we are concerned, he is the Rangers boss and we all thrive on working under him."
Thomson earned his only cap so far in the goalless friendly against Northern Ireland under Burley in August last year.
Injury and illness have forced him to withdraw from subsequent squads since then, meaning his experience of the Burley regime was limited.
When quizzed on whether he felt all the players wanted to play for the former boss, Thomson said: "You would need to ask them. Some of the boys had pulled out for certain reasons.
"The whole situation regarding George, the backing he had I think was pretty poor.
"Whether that was from the boys or from the media, I certainly don't think he had the backing of the nation from the word go.
"At the end of the day, someone has to carry the can and, whether that is the players or the manager, it's just part of football."
While several former managers and players have had their say on the sacking of Burley, his nephew, Craig, was perhaps the most critical of the current crop of players, claiming they were "too thick" to understand his coaching methods.
Thomson said: "As a professional footballer, it's part and parcel of the game. When things go wrong, flak comes.
"If the boys had won on Saturday, they would all have been great players and would have got 7s and 8s in the papers and there wouldn't have been a crisis. But it's a results business.
"I do feel that Scotland have got the potential to have a good squad if we can get all the players fit and on the park. If we can do that, I think Scotland can have a successful national team."
Meanwhile, it is understood that compensation between the SFA and Burley has all but been agreed and will be agreed in full by Wednesday.
After negotiations, Burley is set to leave with a settlement in excess of £300,000.
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