I have only burnt my own handmade incense three times (using recipes from one of the Scott Cunningham books mentioned above). I had the same problem with the charcoal blocks smelling awful. The first time I burnt any inside, the room where I burnt it in smelled like someone had been smoking cigarettes in there for days and days, sometimes I can still detect it and have to open the windows the re-air it (I think it's in the curtains - will have to wash them at Imbolc!) Would you believe the receipe was intended to purify my altar ...!
The second time I made some for a simple healing ritual, I did this outside so my room didn't get all smelly again but I would've preferred to do it inside. I read somewhere that if you light the charcoal outside and bring it in after the initial lighting then it smells less but as I haven't tried that yet, I don't know.
The third time, I put some incense on some tinfoil and put it on top of my wood burner in the evening. It gets quite hot on top there, we actually roasted chestnuts on their (on tinfoil again) in December. (They took about an hour an a half but I digress!) Anyway, the incense smelled SO much better this time around; it didn't actually produce any smoke but it was definitely producing some fragrance, and it had gone black by the end of the evening so I guess this was the slowcooker version. It was a very subtle way of using incense and probably good for meditation purposes as it lasted all evening, you wouldn't need to go back and keep adding more.
I'd love to buy some of the bamboo charcoal mentioned above, especially if it smells less. I found a UK supplier at this URL (you have to register), are any of the items on this page, the same as you get from the USA?
http://www.shishahookah.co.uk/shisha-charcoalMy tip for making incense is after you've smashed it up as much as you can in a pestle and mortar is to sieve it afterwards and that way you get a finer blend of materials, put the bigger bits back with your source material to use on another occasion. I find this especially helpful with frankincense as it gums up a bit.