As the resident Balloon Guy I'll try to answer your Balloon specific questions.
Question 1: "On June 4th, 1861 Isham Walker of the Jeff Davis Rifles wrote a letter to the Secretary of War about using a balloon to drop poison gas from a balloon on to Fort Pickens and the Federal fleet. But was this practical?"
1. The Confederate's did not have professional Aeronauts to operate their balloons.
2. The Confederate's did not have a balloon - or put the one they had in the air until April 1862 . . . . 10 months after Isham Walker's proposal. It was the ONLY heated air balloon used during the Civil War. An Adjutant to General Magruder, CPT John Randolph Bryan, volunteered to be a Scout, thinking it would be from horseback, put him in the fight, and get him away from his desk job. He convinced General Johnston he was familiar with the area through a map recon and was surprised when Johnston said: "Report to the Balloon!". To make a long story short, after Bryan made his first ascent he was the Confederate's only experienced Aeronaut and made a total of 3 ascents before the line tethering the balloon was cut and the balloon was damaged beyond their ability to repair it when it landed. CPT Bryan gladly went back to his desk job.
Those interested can read about his adventures here:
'Terrible Experiences of a Confederate Officer who saw
the Enemy from Dizzy Heights.'
3. The Confederate's second balloon, built in Savannah, Georgia by a businessman, was half the size of the Union's smallest balloon at 7,500 cubic feet of volume, could only carry one person aloft, and leaked like a sieve. It made it's debut on June 24, 1862 with E.P. Alexander as the observer in the basket. Again, the Confederates did not have professional Aeronauts to operate their balloons. Officially named the Gazelle, this balloon was captured 10 days later on July 4th, 1862
Question 2: "Could a balloon at two miles height hit a fort or a ship with a gas bomb?"
Simple answer: NO!
1. John LaMountain – who contracted privately with General Butler at Fort Monroe – preferred free flights, but the majority of Balloon ascents by both the Union and Confederates were tethered to the ground.
2. In freeflight winds vary in direction and speed with altitude. In 1861, 2, & 3, there was no way to forecast either.
3. In order to fly over the target the pilot must start upwind, catch the right winds during flight, drop the bomb, and land in friendly territory or make his way safely back through enemy territory after he lands.
The logistics with the technology of the time make this task insurmountable.
John Wise, America's most prominent Balloonist of the time suggested a plan to bomb the castle at Vera Cruz from a tethered balloon during the Mexican War. That plan was scoffed at by Military Leaders and never made it off the ground.
Like you said . . . . too many iffs to be practical.
Respectfully Submitted,
TSC Lowe Aeronaut