Also, it is far from a water source and would be hard for me to keep watered all summer long. Is that a problem?

The wind in that location may be a problem if they are strong enough to make the flower panicles break or bend. Lack of water during the summer months is indeed a problem.

This is a new shrub so little information is available at this time but paniculatas tend to be hardy.

Thanks so much. A landscaper is recommending that plant but I'm just not sure. Thanks for you input.

Amongst hydrangeas, they can be considered somewhat drought tolerant; the most "drought tolerant" may be the oakleaf hydrangeas though. Still, the need moist soil and cannot stay as dry as -say- roses or daylilies.

There are a bunch of new dwarf panicle hydrangea out for 2011/2012 season.These paniculatas are drought/salt tolerant with some help. Add some peat moss,mulch,water crystals and let nature do the rest in zones 4,5 and 6.First you should decide if you like the lace type panicle or the fuller panicle this will help you decide where to start.
The lace type panicle bring winged insects galore bees,flies,hornets,etc.Most of these paniculata types are one trick plants with one bloom period and then yellow leaves.These are larger plants that will blow past the max size limit a bit.The dwarfs vary in form a little,the quality of the flower show is what is important.

White flowers can be seen at night,reds fade away and get lost.These plants work best with foliage background plants like Black Velvet smokebush,Japanese maple,Miscanthus sinensis 'Variegatus'
or Henry's Garnett sweetspire for daytime veiwing.

Hydrangea Mysticalî Flame
Hydrangea paniculata âÂÂBokratorchâÂÂ

Video
Mystical Flame

My two cents,the habit of this plant is ho hum the leaves seem to be in the flower. It looks messy and the flower is a bit too lacy and sloppy.This one reminds me of a Rose of Sharon just a little weedy.When the flowers burn out what is really left.When Sept. first rolls around on the early bloomers that is the end of flower production.

Here is a nearly complete list of the dwarf paniculatas out now.Starting with the best one i have seen so far Sweet Summer.I am a newbie,just sharing what i found while shopping for paniculata's.

Hydrangea paniculata Sweet Summer
Hydrangea paniculata Bombshell
Hydrangea paniculata Little lime
Hydrangea paniculata Baby Lace (hard to find)
Hydrangea paniculata White Diamonds
Hydrangea paniculata BOBO
Hydrangea paniculata Fire and Ice
Hydrangea paniculata Mystical Flame AKA Everlasting Flame
Hydrangea paniculata Sunday Fraise (coming soon)

HYDRANGEA quercifolia dwarfs
HYDRANGEA quercifolia 'Munchkin'
HYDRANGEA quercifolia Sikes Dwarf

Forgot to answer your questions.
Will they thrive? Yes some are rated to zone 3
Far from water? Best to start with a trench planting then fill the trench with a water retaining soil mixture and native soil. Peat moss,water retaining crystals, native soil and mulch to top it off.In the northeast with good soil there is enough rainfall, that supplemental watering should not be needed.Except for maybe during hottest parts of the summer for the first few years.

Windy planting bed? Strong stems are the key,weak stems will flop. Winter damage if any will be quickly replaced in spring by new growth.

Here is a good example of how a strong stem hydrangea should react to wind.

Hydrangea in the Landscape

This plant is a bust. Let me repeat this plant is a bust.

Limelight tends to flop in the rains but do bounce back. Limelight is probably the best hedge style paniculata.

Id suggest the oakleafs-better fall and winter interest

As I but its rare to get flowers in zone 5.

For the most part if you prune paniculata in a fashion that promotes thick upright stems off the main trunk then flop shouldn't be much of a problem. But doing this with dwarf varieties may be tricky.

Flowering shouldn't be a problem as long as the "sun-water-fertilization" triangle of conditions is met. Thicker stems will have much bigger blooms, especially at the terminal ends.