Okay, after spending some time into this it seems I was wrong in my assumption that cycles materials would work in the Hydra delegate. I mean it has an “check” in T96731 but when I look at the code there seems to be no indication that this is actually implemented (I might be wrong on this). It also matches the post from @brecht in Cycles Hydra Render Delegate and USD feedback - Cycles Development - Blender Developer Talk where it says
Editing of device settings, render settings and materials is completely missing or limited host applications, which is the main thing to improve.