My other thought/question is are we not supposed to provide overcurrent protection which should prevent the cable from being the source of the heat necessary to produce the smoke?
Well, if the OCPD also provides arc fault protection, then yes. But that is a whole different thread.
Plumbers and others will put plastics in air handling spaces and nobody mentions anything about those?
Somebody probably should. I suspect that it is not code except for certain types of pipe.
I don't know the burning characteristics of flex duct, but it is likely nasty fume producing if it does burn.
I'll have to look into that one!
Anyway, I just try as much as possible to avoid air handling space with NM cable, then you have no problem with your installation to start with.
That also takes care of people who go through the sheet metal itself and do not provide bushings.