OBJECTIVES: I. Determine the efficacy of inhaled budesonide on the number and grade of bronchial epithelial dysplastic lesions in former and current smokers. II. Compare the effect of inhaled budesonide vs placebo in modulating several intermediate biomarkers (i.e., proliferation, apoptosis, morphometric, and methylation markers) in this patient population. III. Correlate the regression of bronchial dysplasia (number and grade) and improvement in sputum cytology (morphometric grade of atypical cells) with the modulations in molecular biomarkers in this patient population. IV. Compare the stability of the chemopreventive effect of these treatment regimens at six months after completion of these regimens in these patients. V. Compare the safety of these treatment regimens in these patients.