She pocketed a $400 bonus for her feat, taking her total prizemoney to $700.
Smit said it was special for her to have broken Sylvia's record because Allan also looked up to her to perform.
Said Allan: "It just shows she's running very well although it took her five years to do it."
Smit, a Canterbury University runner, told Allan she was putting the money towards her wedding on December 13 to her English fiance, Sam Petty, a sprinter whose personal best is 1:49.
Smit said: "He'll graduate from Birmingham University and I'll finish my education [major] and psychology [minor] here too by then."
Allan coached wife Sylvia who succumbed to a rare form of brain cancer on August 31, 1999.
Allan and Sylvia's Oxenham family helped set up a trust that donates $1000 every year to HB Cancer Society as well as any money collected from gold-coin donations at the gate.
Smit, of Christchurch, said it was an honour to compete, let alone win or better Sylvia's time.
"It was also my first win of the season as well because I didn't have a very good mile [at the Lovelock meeting in Timaru] a few weeks back," she said.
"My time wasn't very good at all and I was so run down so today showed I can quickly come back from disappointment."
Smit knew she had it in her and all she needed to do was come out and perform.
She appreciated having a pacemaker, considering she finished comfortably ahead of the rest of the field.
Her much-anticipated challenge from Nikki Hamblin, of Wellington, fizzled out.
"I felt sorry for Nikki because I was looking forward to her getting back to racing and she's done a faster time than me so I'm sorry to hear she's unwell," she said, hoping she'd recover so they could push each other before the Glasgow Commonwealth Games in July.
Double Delhi Commonwealth Games medallist Hamblin, who was runner-up in the 800m and 1500m distances in Delhi, has the faster time of 1:59.66, set in Croatia in 2010 before that Commonwealth Games.
Smit's personal best is 2:00.03 and she'd held the previous fastest time of 2:06.97 at the windswept sports park.
Motueka's Toni Hodgkinson holds the women's 800m national record with a time of 1:58.25 set at the Atlanta Olympics in 1996.
It pleased her that other young girls in the field were reaping the rewards with PBs.
Having achieved a qualifying time for Glasgow, Smit wants to do it again.
"It should be fine but I want to be running faster than that anyway."
She felt it was all great competing in overseas events but it was imperative athletes returned home to support their national series.
"This is where I learned the sport so I want to keep it strong."
Getting on the podium among medal winners is Smit's goal in Glasgow.
"Gold would be amazing but, you know, nothing's impossible but you have to take one step at a time," she said, adding it would put her in good stead for the Rio Olympics in 2016 as well.
She thanked everyone, especially Allan Potts who always wished her well.
"I hope his health improves and he enjoys everything here with his family supporting him."
Smit said she would definitely return to claim her sixth classic crown.
Allan Potts has set a goal to watch the Glasgow Games. His son, Nicholas Potts, is a cricket coach in the Scottish city.
Another Cantabrian, Rosa Flanaghan, 17, finished a country mile ahead of the under-20 3000m field to stop the clock at 9min 29.48sec.
Just out of Rangiruru High School, the teenager intends to go to the Australian Juniors in Sydney and Melbourne meetings in an effort to find runners who can push her for qualifying times.
At the secondary schools nationals last month, Flanaghan was under the world junior championship B standard for the distance.
National middle-distance coach Maria Hassan has helped make dramatic improvements in Flanaghan's times in a year.
"Running into the back straight towards the end today by myself was quite tough," Flanaghan said.
The University of Canterbury Club member has already made the cut for the 3000m steeplechase in the world junior championship to be staged in Oregon, USA, in July.
"Steeplechase is similar but it's tougher on the legs going through the water," she said.
To put a sinewy Flanaghan's time in perspective, fellow Cantabrian Sarah McSweeney, 24, clocked 10:25.43.
That was the best time from a Kiwi last year in the senior women's Open grade.
