Stupidity: Lance and Lana's actions at the end don't make sense, other than to set up conflict for the plot. Lance won't give Lana a shot. Lana steals a vile and after Lance injects Lex (to stop him, fine), he finds Lana, who is trying to inject herself. He stops her, throws her back, then proceeds to try and inject her. He could have just waited and let her do it herself, or taken the vile and left. Lana is then scared that Lance is about to inject her when that's what she wanted in the first place.
Stupidity: When Clark is trying to sneak Lana out of the house, they walk past the front door in order to go through the kitchen door, where they get caught. It makes no sense to not use the front door. This way Lana is already outside, the whole goal in the first place, should his mom or dad see them. Not to mention the fact that Lana's car is still parked outside and Johnathan or Martha would have seen it, so they shouldn't be surprised to see her in the house.
Stupidity: When Lois, possessed by Dawn, comes downstairs and says she's going to the prom and Clark is taking her, Clark doesn't think for a moment it could be Dawn. He already knows Dawn can posses others, those people don't act like themselves, Dawn is obsessed with the prom, Lois isn't acting like herself, and Lois is now not only suddenly prom obsessed for no reason, but wants to go with Clark when she said that would never happen.
Stupidity: After the accident, Dawn is in spirit form on the road trying to wave down an oncoming car (driven by Martha Kent). Dawn doesn't know she's a spirit that can pass through objects at that point. Since Martha can't see her, she keeps driving straight towards Dawn. Dawn sees the vehicle isn't slowing down and instead of simply stepping out of the way to avoid getting hit, she turns her back, revealing to the audience that objects can pass through her now.
Answer: The kryptonite only creates mutations when it reacts with the environment and an individual. Remember, the FDA and several environmental groups did check out Smallville after the meteor shower, but found no danger in the rocks. Obviously they're not always emitting mutating rays, or all the flora and fauna of the surrounding area would be horribly mutated.
Phoenix