Trumpy,
You left out a step. A switch mode power supply works by taking AC, rectifying it to DC, chopping the DC at high frequency (thus high frequency AC, usually with a substantial DC component), using enery storage (usually an inductor), and producing the necessary low voltage DC.
The source of the harmonics is the _low frequency_ rectification. Basically you see a pulse of current during the peak of the AC voltage waveform, when the AC voltage is greater than the rectified DC voltage. At other portions of the AC cycle, the current flow is zero.
This pulsing current has a very strong harmonic component. This isn't sending pulses down the neutral per-se, but instead creating harmonics, some of which can only flow down the neutral.
If you design your SMPS properly, with a 'power factor correcting' front end, then you can cause the input current to flow in phase with the supply voltage, and virtually eliminate harmonic issues. You still will have switching noise issues, however.
-Jon
