CO experiments have been confined to mice and rats, and do show some improvement in colitis, but there are few studies. Whenever I read mouse and rat studies, I always keep in mind that the colitis is chemically induced, which makes it a poor substitute for the real thing, in my opinion.
On the other hand, there are plenty of human studies using nicotine. The trans-dermal patch works the best, at pretty high doses. To someone not used to nicotine -- ie, nonsmokers -- the effects of the nicotine are disturbing. If I remember correctly, there seems to be a high drop-out rate in these studies, mostly nonsmokers, which may account for the belief that nicotine works only among former smokers.
For awhile I tried herbal cigarettes -- the fake ones actors smoke -- but they didn't do anything. Lots of CO but no nicotine.