I never hug patients, ever. It’s a personal preference for me, but I will continue that practice even when I am a doctor. View it like this, you have something valuable which is your license which in turn will provide for you and your family. Never put yourself in a situation that can be misconstrued as inappropriate and therefore put your license at risk. The most I will do is fist bump with a patient, or a high five, which most patients accept. That will be something you will have to figure out yourself at your comfort level.
Second, your original post suggests that you are in an inpatient psych type of situation correct? You have to always keep the goal of immediate stabilization when trying to parse out delusions. If they are there on petition and certification and are going to mental health court, you need to prove that they need inpatient treatment. Why are they a danger to themselves or others or why if not treated on an inpatient basis, will they decomp to a point that they will not take care of themselves. Your example of the woman with the smoking delusion is irrelevant because it doesn’t matter to the immediate goal of stabilization and if you go to court saying she needs inpatient because she is fixated on being permanently pregnant, your petition and cert is thrown out and she has no treatment now. That is a delusion that should be addressed on an outpatient setting.
If for example a person is fixated on their child and thinks they are a demon that needs to be killed, that is something to address because that person is an immediate danger to someone else/themselves. That is the nature of inpatient psych, your goal has to be stabilization that justifies inpatient care and try to help that patient set up continued treatment once discharged.
This of course is under the assumption of a typical psych hospital working with insurance companies. You always have to justify the need for the treatment at the level of care that you are providing it.