Any Reason Someone Tied a Wire From Neutral to GND in This Receptacle?
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In that instance no.
Generally they are using the nuetral as a common and they pull the minimal voltage on them to use operationally
So you would suggest replacing the 12/2 with 12/3 then?
Seems like the smart switch would barely draw any current so it’d probably work fine but I realize it’s not the “right” way
Yes.
As a note.
It wasn't wired wrong. Was commonly accepted practice for many years.
It's how I was taught to run switch legs, if it made sense to do so. Save wire and all that.
Now, with the advent of smart devices and the IOT, I teach my apprentices to pull a neutral to every switch box regardless. Either a 3 wire from the switched device or a 2 wire to switch and next device, and up to switched device.
New residential builds in Canada can no longer have switches wired in this way for exactly that reason