I wonder if the hydraulics problem was hydraulic fluid backing up the reservoir pressurising lines into the pneumatic manifold, and then getting into the packs? If so, that haze would have organophosphates in it, which is not an insignificant issue. Regardless, see smoke, land ASAP. Seems like a good decision.
I'm not sure about the pax oxygen being used, though, if the reports are true. If you have a potential cabin fire, introducing more oxygen is a bad idea. Even if you know it's fumes from a non-fire source, then those masks aren't going to help as they don't keep the fumes out, they just add extra oxygen to the cabin air being breathed in. Doing the smoke/fumes removal checklist would have isolated either/both packs as the source if it was from there and ventilated the cabin. The oxygen would only have been necessary if the packs had both been shut down and the outflow valve opened above FL100...