Yes, it will recover. Powdery mildew is merely a cosmetic affliction typically related to cultural factors, like high humidity, poor air circulation or inadquate watering. Other than some susceptible annuals, I've never know a plant to die from PM. It is very likely that your plant was infected while at Lowes. Continue with the neem treatment, water no more often than necessary but water thoroughly when you do and pick up and destroy any fallen leaves. It should be fine next season.

If it only had powdery mildew that is OK, but what I have found from stores like Lowe's and Home Depot is that, a lot of their hydrangeas are stuffed together with poor air circulation. So later on in the season, they will get all sorts of diseases such as powdery mildew and worst of all, fungal spots (e.g. cercospora). If there is any fungal spot, I would definitely return it and get a clean one, as that spot would come back year after year and may even spread to the other plants nearby.

I'm not sure that's precisely correct :-) Cercospora leaf spot is frequently present on hydrangea plants in a nursery settings, often brought on by crowded conditions, overhead watering and stress. Again, this is not a fatal affliction but more cosmentic in nature, although a heavy infestation can promote premature leaf drop and reduce bud set. Once these plants are settled in the landscape with decent air circulation and correct watering conditions, they typically outgrow the problem. If it is recurring in the home garden, it is most likely because conditions exist that promote the disease, like high humidity, drought stress or high rainfall. Observing good sanitary practices like cleaning up any affected foliage that drops and destroying it will help to prevent the problem from overwintering and possibly reinfecting. Much like the PM, I would not consider it a significant enough problem to warrant returning the plant.

So...I also have 4 hydrangea (Nikko) that were given to me and were purchased at Walmart. They were spindly, covered with what looked like is described as powdery mildew, and had a few 'rust' spots.
I pulled off most of the rust spotted leaves. Planted in dappled sunlight, with lots of compost and peat added. Sprayed with fungicide at 7 day intervals, and water every 2nd day with a drip line for 2 hours.

They are showing very green new growth, although it looks spindly as the new growth has only leafed out at the tops. There are new buds along the branches of each plant.

First - in zone 6 do I need to protect these for the winter?
2nd - next spring do I need to use fungicide earlier to ward off disease, or is that even possible. Are they a total loss?
3rd - If I take cuttings will the new plants have the same afflictions?
4th - how effective are natural preventatives? Milk is pretty cheap compared to fungicide? What dilution do we use?

Thanks to all!

1) NB is winter hardy in Zone 6 so in theory, you do not need to protect it as long as you maintain 3-4" of mulch and water every two weeks or so during dry winters while the ground does not freeze. But if you live near Zone 5, there may be some times when a really cold winter could affect bloomage; winter protection would ensure that the really cold winter does not affect the flower buds.

2) When hydrangeas develop a fungal disease, it would be wise to spray according to the label instructions this year and next at the least. Some spores will likely escape because they are residing on stems, rocks, the mulch or other plants. The spores can remain alive for years so drench the shrubs well (top and bottom of leaves). Dispose of plant debris in the trash and make sure the environment is not conducive to re-development of rust. When the plants go dormant in the fall, dispose the leaves and blooms in the trash.

3) Hard to tell but it is possible since we cannot "see" if spores reside in the cuttings before you cut them.

4) Milk can be useful against powdery mildew infestations but I have not heard of it used against rust. A 1 part (or two parts) milk, 9 parts (or 8 parts) water solution can be sprayed to the top and bottom of the leaves weekly until the problem goes away.

Why dink around...take it back.