I definitely 'judge' although disgree with the negative associations that brings. After all we learn a lot from other parents and I am always assessing if what someone does fits with what we do and is something I can take on board. As for negative judging there are some things that really get my goat, especially if I think the children really are negatively impacted by that. If I can find a way to say something in a way that isn't hurtful then I will, especially if the parent seems open to it. For example a friend of mine was ignoring her child who was a having a tantrum in public. The boy was obviously really tired and the mum pretty embarrassed. She mentioned to me that she has been told to ignore the bad and praise the good. I told her I didn't really mind what others thought but always cuddled if they were upset. She went straight over to comfort her son because that is obviously what she instinctively felt she should do but thought I would judge her. So open dialogue is so important because we all need to support each other. If I saw someone giving a toddler some coke I probably wouldnt really notice even though DS rarely has sweet drinks (we save the sugar for the ice-cream - LOL) and it wouldnt be something I am likely to mention unless the mum says her kid has behavioural problems and then I would say something like "I have heard that the caffeine in coke....." in a non-confronting way.
On the other hand there are the situations where I would feel like I have to say something. I think your situation is one of those. Living with a known paedophile?!?! That has to be followed up because unlike cutting your foot on glass that will affect the child for the rest of their life and will scar them in so many ways. I agree that it has to surely be illegal. Unfortunately smoking around kids isnt illegal yet.

Not sure if this would have helped. Hopefully. I think you are in such a difficult decision. Personally I would just call someone about the paedophile thing first. You aren't going to get through to her if she hasn't figured that one out for herself.