I just finished an overnight test drive of an '06 Prius. I commute from Heber City to Salt Lake City, UT, everyday, 40 miles each way and cross 2 mountain passes as high as 7,700 feet. Heber is at 5,600 feet and Salt Lake is at 4,200 feet. The grade from Salt Lake to Parley's Summit is 6% to 8% and gains 3,500 feet in about 15 miles.
The Prius climbed the grade easily at 60 mph. I didn't go faster because it was snowing and the road was getting a bit tricky and it wasn't my car.
Even with stock tires the car has amazing traction and stability.
I have lived in N.C. and the car should handle any grade you find in the Smokey "Hills" as well as it does the grades we find here in the Rocky Mountains.
I put 120 miles on the car during my test session and it gave great power and response everywhere I went. When I returned it to the dealer the computer said we averaged 45.8 mpg. Probably would have done better had I been able to use the cruise control.
Brent