Would Smaug have actually followed and allied with Sauron had he lived on?

The passage in question comes from Appendix A to Return of the King:

Among many cares he was troubled in mind by the perilous state of the North; because he knew then already that Sauron was plotting war, and intended, as soon as he felt strong enough, to attack Rivendell. But to resist any attempt from the East to regain the lands of Angmar and the northern passes in the mountains there were now only the Dwarves of the Iron Hills. And beyond them lay the desolation of the Dragon. The Dragon Sauron might use with terrible effect. How then could the end of Smaug be achieved?

None of this actually implies that Sauron had to force or compel Smaug to do anything; in order to destroy Rivendell, for example, all that's needed is for Smaug to be pointed in the right direction and left to do his own thing.

The Hobbit notes that rumour of the wealth of Erebor was probably what had brought Smaug there in the first place:

...So my grandfather's halls became full of armour and jewels and carvings and cups, and the toy-market of Dale was the wonder of the North.

Undoubtedly that was what brought the dragon...

So in order for Sauron to destroy Rivendell, or Lórien, or any other kingdom he wished, it would have been sufficient to spread rumour of wealth there too.

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Despite all of this, the probability is that Sauron actually would have been able to command Smaug.

We must not forget (from the Silmarillion) that Sauron was Morgoth's second-in-command, he commanded Angband before the Chaining of Melkor, and "kept the seat warm" for Morgoth while he was in captivity in Valinor.

And Melkor made also a fortress and armoury not far from the north-western shores of the sea, to resist any assault that might come from Aman. That stronghold was commanded by Sauron, lieutenant of Melkor; and it was named Angband.

We also know (also from the Silmarillion) that Balrogs remained in Angband during the captivity:

Far beneath the ruined halls of Angband, in vaults to which the Valar in the haste of their assault had not descended, Balrogs lurked still, awaiting ever the return of their Lord; and now swiftly they arose, and passing over Hithlum they came to Lammoth as a tempest of fire.

Putting two and two together here, we see that Sauron quite likely had (at least some) authority over Balrogs during the First Age, so commanding a mere dragon should have been well within his capability (yes, I know there are some that believe that dragons are Maiar, but there's absolutely no evidence in Tolkien's writing to support that belief).

Finally, Gandalf as a Maia evidently believes that Sauron would have been able to use the dragon, and we must assume that Gandalf is in as good a position as any to know what the capabilities and limitations of another Maia are.

I'm not sure that Smaug could have been compelled to work for Sauron. Sauron was powerful, but he was no Morgoth. There's no evidence in The Hobbit or The Lord of the Rings that Smaug (or any other dragons in the Withered Heath) was receiving any directives from Sauron, or felt the presence of Sauron. For that matter, the Balrog in Moria wasn't under the control of Sauron, either. I think Sauron would have been hard-pressed to convince Smaug to leave his vast hoard unguarded to attack Rivendell.

Melkor/Morgoth created or loosed the dragons to do his bidding in the Silmarillion, Sauron is basically his successor after his banishment to the void, it is highly logical that Smaug's taking of Erebor was at Sauron's request to begin with and that Gandalf was trying to prevent a dragon lead assault on Rivendell which Smaug would relish since Eärendil, Elrond's father, killed Ancalagon the Black, chief dragon during the war of wrath, which turned the tide of that battle.

Melkor/Morgoth persuaded or seduced Sauron, Gothmog and other Maiar (Balrogs) with greater rank, influence or level of power then they would of had under the Valar. He persuaded Ungiliont to attack the Two Trees in Valinor with the sap that could end her undying thirst and hunger. What's important though, is did not create them which is important. He could only influence thier motivation.

He did however create the Dragons, trolls, orcs (goblins), and other fell beasts. So I would think that Sauron being his leutenent would of had influence and command over these before he lost his power in the destruction of Numenor'. He lost even more power at his defeat at the end of the second age to the last alliance.

So, War of The ring, Sauron would of only had the power to seduce Smaug with promises of greater fortune and power. He wouldn't of been able to physically or mentally command him. To command the Balrog would have been even harder since it was a Maiar of the same level as Sauron. It would have been an alliance if anything with each looking out for thier own interests. They might have even came into conflict between them sooner or later. A good example would be three different crime families with three different bosses, but all wanting wealth and power in the end.

I don't believe that Smaug had any reason to side with Sauron off the strength of his at one time being designated as 2nd in command from over 8 thousand years ago. Even during the 1st age....Sauron's authority was at the end of the day a product of and designated by Melkor......at this point I doubt the Balrog or Smaug could offer a hair about whatever "commands" a weakened former "captain" issued them after ~8000 years of experiencing relative peace and consumption....without offering something substantial in return.

Essentially, I don't believe that either particularly cared what was going on outside of Erebor or Khazadum.....if Melkor returned....maybe....but Sauron?

Smaug's vanity is too strong for him to side with anyone. He is more compelled by fear of loss than hope of gain. Besides he only has his biding in mind when he exacts anything upon anyone. Quoting Tolkien is creating allegories which he despised. We should focus on applicability and find inner meanings by our selves and not enforce them on others. My reading is that Smaug if he lived would likely be forced into a position where it would be impossible for him to stay neutral.

Tolkien wrote, as already quoted that Gandalf thought Sauron would use Smaug to great effect. Tolkien wrote it, he knew whether Sauron had power over Smaug as it was his story, his writings - so what is the debate? Tolkien said through Gandalf that it would happen, so it would happen, or are there people here who know Tolkien's writing. Tolkien's world, Tolkien's mind better than the man himself?

In any case it is clear that Sauron is considerably more powerful that Smaug, Sauron is (was) on an entirely different level and Sauron has command over Morgoths subjects, so why would he not command the Dragon?

Yes Sauron would win, he was a top class Maia, way above all others Maia we knew in the books, there is a reason Gothmog was a Balrog and not a leader of Balrogs that could do what he wanted and be what he wanted! Sauron was the greatest Servant of Morgoth, Smaug himself talks about Sauron knowing that he will dominate all the land, Smaug knows, the only doubt is if Smaug will serve him or flee because he cannot face him alone, people see Galadriel banning him and think that makes him weak, but let's remember that Morgoth would not try to kill Fëanor, that tells a lot, Maia and even Valar respect a lot ancient elves.

Sauron and Smaug would have fit perfectly as allies: Smaug wants gold and riches but he is not interested in ruling over something or someone. Sauron wants to rule over all of Middle-earth but cares little if anything for riches and treasures. Even if Sauron wasn't strong enough to bend Smaug to his will with or without the ring, all he'd have to would have been to offer Smaug plenty of gold to buy his services.

well, i think most of you are forgetting that sauron was at least trying to achieve what morgoth tried, and on top of that there where no forces wich could rival a full grown fire-drake, not anymore since the second age! also, morgoth created dragons, balrogs, orcs, and fell beasts. sauron took over the orcs, and let's not forget that he was the leader of at least nine fell beasts, wich are simmiliar to drakes. so there is alot of chance that sauron would simply take dale with no resistance, then deceive smaug into attacking sauron's targets and maybe also help him cover up his one weak spot. basicaly if sauron managed to AGAIN try to take erebor, there would be no need to enslave smaug. he just would have done some damage, at least directed by sauron. i think sauron could easily harness smaugs's power, not to mention smaug did attack laketown out of anger and malice. sure, he wasnt evil, but that's only for the books, and even in the books gandalf was worried about sauron gaining smaug's aid. plus smaug said in the movies that he knew an offense wouldn't do anything since a darker evil was already coming.