The government has required the energy companies to fit smart meters in all properties within the next few years so I would expect the supply company to fit a smart meter as a matter of course.
http://www.uswitch.com/gas-electricity/guides/smart-meters-explained/
As far as I am concerned the main feature of relevance is the ability for the meters to communicate with the supplier directly, so there is no need to read the meter any more. This would sort out your inside/outside issues.
The other "features" of a smart meter (the ability to see your energy usage, etc) can be ignored if you want to.
Your supply is going to be fed from overhead lines in a mountainous rural location so under those conditions I would definitely keep the generator as a back up. You are certain to have bad weather induced power failures, possibly with the power off for some time. In those circumstances a generator is not a luxury.
You will need a change over switch to merge the two supplies to the property, and the Supply company's meter will need to be on their cables, before any change over switch so i think it likely that the meter will be best at the Generator shed.