No, they are not interchangeable. Hydrate means to nourish/supply with water. If a plant is really dry and you give it water, you are hydrating it. When you drink water, you are hydrating yourself. Hydrate is a verb. Hydration is the noun. (Hydration means the process of supplying water). It is important to keep up your hydration so you have enough energy. The hydration of plants is a key component in caring for them. Etc.
Just to make sure, my dictionary states that hydrate can be a noun, which means chemical compound of water with another sudstance.
This definition is very abstract to me; I haven't the slightest idea of its referent.
Yes, I think it can be used as a noun in Chemistry and such. When I think of it as a noun, I think of something mixed with water, not just plain water. In everyday language, though, hydrate is not interchangeable with water (as a noun).
The sodium hydrate is used in many medicines. (Sodium hydrate = sodium chemically combined with water. I just made up the part about medicines, I don't know what a sodium hydrate is actually used for!)