Was what they did illegal? And do I really have to pay for this if I have no job, no income, and a function license plate light?

You're asking a two part question.

First - the license plate light. This is a favorite Vehicle Code section for officers to use to pull people over - there are a lot of non-functioning lights out there. Any Code violation is enough to pull over, so this is used quite often. The code says that you must have a light that renders the license plate "clearly legible from a distance of 50 feet to the rear." (Vehicle Code section 24601). If your light was on, but provided inadequate light, it can be a violation of this section. The defense is that you have to convince the court that your plate was visible from 50 feet. If you really believe your light was working properly, go out at the same time of night in the same area where you were stopped, measure 50 feet and take pictures without a flash. It won't be exactly the same as though observed with a naked eye, but if is legible from that distance as documented in pictures (be sure to take several photos showing a measuring tape to prove it was 50 feet, etc), you may have a shot at beating the ticket. You can do a written trial by declaration and if you lose that, you can have a court trial. The other option is to replace the bulb and/or fix the wiring so it works properly and have it signed off, pay a nominal court processing fee and you're done.

As to the second part of your question - the search issue...

If the stop was valid and the officer smelled marijuana, the "plain view" (or in your case, plain smell) will allow the officer to search anywhere in the car where the contraband could be found. If you had given your consent, he would have had two reasons to search. In this case, the smell provided his probable cause to search.

But...

He found nothing. If he found no marijuana, but found a gun under your seat, you may have a fight, saying that his reason was made up because there was no marijuana...

In your case though, there was nothing found, so there's nothing to suppress. It may have been a complete hassle, but unfortunately, there's no real solution. Could you sue for a violation of your civil rights? Possibly, but the monetary damages appear to be slight, if any and the possible defenses make the likelihood of prevailing unlikely.

Mr. Dane has provided an excellent answer to your question and some practical advice on how to handle the ticket if you are inclined to fight it. As for a possible civil action for money damages, the peace officer and the law enforcement agency enjoy a number of immunities which would likely provide a complete defense to your case and the potential damages would be very limited. Prosecuting such a case would also be far more inconvenient than what you went through in the incident.