On a grill, you can set up the fire by pushing the coals to the sides (or only turning on side burners), then add either wood chunks or chips in a foil pouch (if you're using gas).
There's really no need to sear a pork shoulder (butt is part of the shoulder, picnic is the other part). Keeping the heat under 350, you can make pretty decent pulled pork.
I have never found the need to apply rub early, especially not 2 days, and you run the risk of starting to cure the meat. I apply, even for competition, no more than 4 hours before putting it on the cooker.
And, not to be contrary, but I personally don't like liquid smoke; I'd rather apply real smoke.