Wow, someone really needs to go get some cultural senstitivity training! I haven't read anything this offensive in quite a while.
Firstly, if you haven't noticed, you are in CHINA. You are also in Kunming, which is *not* a semi-westernised city in the same way the Hong Kong, Shanghai and Beijing are. The Chinese are not western, and I, for one, think that is a good thing. It wouldn't be an interesting experience for me to live in China just to have everything the same as at home. I could just stay at home and save myself a lot of time and money.
Secondly, the sign at Salvador's clearly states that the building is old and it cannot support "pooping" or toilet paper. Installing a western-style toilet will not fix this problem. It is an infrastructure issue. Ironically, whilst I find your post culturally insensitive to the point of being offensive, I do actually agree that the toilet is the greatest weakness of Salvador's. I strongly suggest that whinging about it here is not constructive, and that maybe you should go talk to the management (two of whom are American and even speak English reasonably well!), and suggest a more thorough and regular cleaning roster and the use of air freshener.
Thirdly, you need to understand that "most" Chinese families have NOT adopted western-style toilets. As I have said above, maybe they have adopted western style toilets in the more westernised cities, but the vast majority of the Chinese population does not live there, and they have not (lothes.blogspot.com/2006/03/asian-toilets.html). In any case, I would take a dirty squat toilet, which I don't have to touch, over a dirty western-style toilet any day! (www.escapeartist.com/efam/75/Surviving_In_China.html)
As for the cigarette smoking assertion, if you don't like the smoking, I'd strongly suggest that China is not the place for you, as they have the highest incidence of smoking in the world (www.wpro.who.int/media_centre/fact_sheets/fs_20020528.htm). In fact western cigarette companies are trying to break into this market, and the government is trying to stop them (www.time.com/time/business/article/0,8599,1099728,00.html). So the west is actually *contributing* to the problem, not trying to solve it. Is that a good habit? Once again, I suggest you talk to the management at Salvador's and see what they have to say.
Maybe you could raise a petition for a better toilet and non-smoking area? I think that would be a better use of our time, rather than me feeling like I have to write this demonstrating that not all ex-pats are as culturally insensitive as you.