It seems as if hypothetical would apply to the vast majority of questions. Every question in which a factual scenario is outlined would qualify for this tag. Only those questions which ask about a law or legal principle without describing a scenario would not. This would make it effectively useless for searching, and for deciding whether to answer a question. In fact, only 42 questions are tagged with this, so it is not being used as described. Does it now serve any useful purpose? should it be removed?
Yes, remove it
That's an olden tag. Maybe it was meant in the old days when law.se was young to differentiate actual cases from hypotheticals... it is surely ripe to face an inquisitorial trial:
While there is no good evidence that it is not a good tag, it is a mostly unused one and should be retired as a result. Only a small fraction of hypotheticals asked ever get the tag, even if other tags are added by edits.