According to a written statement by the pilot, he flew to a clearing, landed, and reset the altimeter to zero. He estimated the grass to be about one-foot in height. He lifted off the ground, put the helicopter into an approximate three-foot hover, and shortly thereafter, noticed smoke. He considered that there was a possibility of the grass beginning to catch on fire and attempted to maneuver the aircraft to the forward and left. At which time the carburetor equipped engine lost power and the rotor speed decayed. He landed in the grass, which was on fire, and exited the helicopter, which sustained substantial thermal damage forward of the tailboom. According to the operator, the accident location was outside of their approved landing sites. The operator estimated that the grass was about three foot in height and that the location of the engine exhaust was directed toward the grass. The Schweizer Aircraft Pilot's Flight Manual has a caution that a fire can result from a landing in tall dry grass due to the exhaust heat. The operator reported no mechanical malfunctions or abnormalities prior to the accident.