I believe that the original adhesive used to attach the Smart's engine bay insulation is the same black urethane adhesive used to attach windshields. I removed the felt insulation on my engine lid and replaced it with the best thermal shielding DEI makes (high temp tunnel shielding). It was easy to pull off the felt -- it was held in place by some beads of urethane adhesive. I cut off the beads of urethane from the engine lid with an X-acto blade, then I used the felt insulation as a pattern to cut the DEI heat shield to exact shape. I pre-formed the heat shield to the contours of the engine lid before pulling the protective plastic off the DEI's adhesive to stick it in place. It's been stuck in place for over 1000 miles and it shows no signs of wanting to come off. The engine lid now remains cool to the touch, even after extended driving.
If you can get some windshield urethane adhesive, you could use that to re-attach the felt insulation. If that felt is already too torn-up, you could cut away the problematical section of felt insulation and use some pieces of DEI or Thermo-Tec heat shielding in it's place. If you do this, just make sure that the metal is clean before sticking on the DEI or Thermo-Tec stuff.