How can I make Emacs mouse scrolling slower and smoother?

You can control the amount in variable mouse-wheel-scroll-amount (in mwheel.el).

EDIT: E.g. Add
(setq mouse-wheel-scroll-amount '(1 ((shift) . 1) ((control) . nil)))
to your .emacs for 1 line at a time.

I also have (setq mouse-wheel-progressive-speed nil) in my .emacs which I think is nicer behaviour.