Sounds like you don't have much to lose by cutting off the dead parts. If you haven't planted it yet you might want to untangle as many of the roots as you can and spread them out in a hole large enough to spread the roots and loose enough to allow the roots easy growth. Might not be a bad idea to add something like Osmocote to give it a nutritional boost. Good luck, I hope it lives and grows well for you.
Do you have a picture please?
Thanks Nancy. I'll give it a try.
I have nearly the same situation. I got a free hydrangea from craigslist three years ago, I had to dig it up so the roots were disturbed. It hadn't done a thing so last week I decided shoot the moon and cut it all back to see if anything might happen. It has all new green growth on it now, don't know if it will flower but it looks better then it did with a bunch of dead sticks all over it. Good luck to us hydrangea lovers!
Do not be afraid to really get in there and work apart the roots before planting. If you get that part right, the plant has a good shot of being happy in its new home. And I would cut back the top to where you see new growth.
I have gotten into these beauties. I have always shied away from them because we face due west. But now I plant them near the water supply so we can keep them watered. I laid limbs down on the ground and put a shovel of dirt on it between the base and end of limb after it quit blooming. They all rooted and I have 4 new baby ones now. I have a new variagated on called "lace cap" that I am going to try and root this year after it blooms. Will keep you posted on this.