Which kind of tobacco do you have? I'm not actually sure it makes a difference, but I've always just bought the brown leaf tobacco and the pipe, given him the pipe first, then the tobacco. From what you're saying it sounds like you've done everything you need to do before giving him that stuff.
Which class are you? If you're a sorcerer, there is an alternative option for getting the seal piece, if you magically scare him.
Also, have you confronted Hummel about his family history and shown him his father's diary yet? This is the only thing I can think of that might be preventing this from working (in which case, this is something we may have to address in our patch.)