This is very interesting work, although I'm still not clear on many points. SMS as well as other text based systems, I think, are based on the ASCII encoding scheme (how you're going to translate sms with smileys is what I don't know!). You may need to store the ASCII code in your microcontroller ROM somewhere to translate whatever messages. The handshake between the micro & the mobile is quite important: serial interfacing is generally tougher work than parallel. How then do you send the SMS from the system to the other mobile? Why the micro system in the first place, when you can just send direct from mobile to mobile?
This is a very challenging & interesting work and one I'll have loved to participate in. Give us more details, hopefully there is someone out there who has done similar work.
Just my ideas.