No, "release" is used only as a transitive verb -- it must have a direct object. You could reword the sentence: Cargo hold No.3 was seen releasing
smoke....
"Issue" has transitive and intransitive definitions. The following intransitive definition is from
Webster's Third New International Dictionary:
| issue: to proceed or come forth from a usu. specified source by or as if by flowing out or emanating or emerging from it. |
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In this context, "release" and "issue" have close definitions, but only "issue" can be used intransitively.