A MD80 ON TAKEOFF CLIMB AT 4000 FT DECLARED AN EMER AND DIVERTED DUE TO RPT OF SMOKE IN FORWARD CABIN AND LOSS OF R HYDRAULIC SYSTEM.

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NORMAL TAKEOFF FROM ZZZ. SHORTLY AFTER TAKEOFF; FLT ATTENDANT CALLED ON INTERPHONE TO TELL US OF SMOKE IN THE CABIN. CAPT MADE QUICK DECISION TO RETURN TO THE ARPT AND TOLD FLT ATTENDANT SUCH. WE DECLARED AN EMERGENCY AND WERE VECTORED TO RWY 24 FOR LNDG. R HYDRAULIC SYSTEM WAS LOST AND RUDDER CTL WENT TO MANUAL. ON DOWNWIND TO RWY 24; WE BEGAN TO SMELL THE SMOKE AS WELL AND IT INCREASED AS WE WERE ON FINAL. IT WAS A STRONG SMELLING SMOKE THAT BURNED AT YOUR EYES. WE HAD TO LOWER THE GEAR MANUALLY ON FINAL DUE TO HYDRAULIC LOSS. NORMAL LNDG AND TOUCHDOWN UNDER MAX WEIGHT. WE TURNED OFF AT TXWY LIMA AND STOPPED FOR EQUIPMENT TO EVALUATE US. WE WERE TOLD THAT THEY SAW NOTHING UNUSUAL EXCEPT THAT THE GEARS DOORS WERE DRAGGING. WE CALLED MAINT AND HAD THEM COME INSPECT THE ACFT FURTHER; PIN THE GEAR DOORS UP; AND TOW US TO A GATE. WE HAD A TOTAL OF 39 SOULS ON BOARD (SOB'S); ALL OF WHICH SWITCHED ACFT WITH US AND CONTINUED TRIP UNEVENTFULLY. TOTAL AIR TIME WAS 9 MINS. CALLBACK CONVERSATION WITH RPTR REVEALED THE FOLLOWING INFO: THE RPTR STATED THE CAUSE OF THE SMOKE AND MIST WAS HYDRAULIC FLUID SPRAYING FROM THE NOSE GEAR RETRACT PRESSURE LINE AFT OF THE PRESSURE BULKHEAD. THE RPTR SAID THE SMOKE WAS STRONG AND ACRID WITH EYE BURNING SENSATION. THE RPTR STATED THE LOCATION OF THE LINE FAILURE PUT IT RIGHT UNDER THE MOST FORWARD PART OF THE PAX CABIN.