I created an AD2 drum pattern using the step sequencer.  Then I pulled the right end of the sequence to as long as I wanted it, about 2:30.  Now I want to mute certain sections of the drum pattern which I figure requires that I split the track into clips that I can then mute.  However, the "S" on the keyboard (using the Smart Tool) doesn't create a split as it would if it were an audio track.  Is there some way I can achieve my goal?  Thanks.

After you have the step sequence to the correct length (loops), close the step sequencer screen, now from the track view, click on your clip, right click, and do "bounce to clip".
 
Now you can edit it like regular midi data.

with the Smart Tool on, you can mouse over the section and then hold the 'Alt' key on your keyboard and then you see the mouse showing sissors, click mouse to cut. Then you can crop the clips etc..