My opinion is to replace it as it reduces sound and serves as a heat barrrier for the hood(i.e.paint). Here is a post I found and saved as a word document and it was great. An extra set of hands helps a lot and use plenty of adhesive. Take it from me, be sure to cover the engine compartment and fenders to keep the adhesive where you don't want it as it is a PIA to get off. By the way I spent the little extra and got the pad from the dealership.

The post (not mine but it was good)

Replacing your Hood Pad
By Dan Penoff

1. Raise hood to full vertical position
2. Find junky sheet to cover whole front of car/engine compartment
3. Get hard plastic scraper (a windshield ice scraper does very well, and I have no current use for one where I live anyway!) and start scraping
4. When you get the adhesive see if the supplier has 3M Adhesive and Decal Remover. This is really nasty stuff but will not harm automotive finishes other than to strip the wax off. Very flammable as well, so don't do this around the water heater or enjoy a Macanudo while applying it. Soak a shop rag in the stuff and get it all over the remaining gook from the old pad. Since it's mostly naptha it does evaporate quickly, so work in small areas. Once the remains of the pad are softened up scrape away! Don't obsess about complete removal, as you won't get all of it off. Some people use metal scrapers such as putty knives which are pretty dull, but I prefer not to. My concerns are that scratches in the finish could possibly rust from moisture trapped in or under the pad. Certainly don't want my hood rusting from the inside out!
5. Once all this is done carefully apply the adhesive. I say carefully since it will attack painted finishes on you car, so spray close to the hood and avoid any overspray. I like to spray a 4"-6" section across the top (front) of the hood with a corresponding application to the pad in the same area. Let the adhesive set up the prescribed amount of time.
6. Get the pad lined up and stick it on in one corner. Line it up on the other corner and make sure it's in place, then press it down. Now the pad will be hanging curtain-like from the leading edge of the hood.
7. Apply the remaining adhesive to the hood and pad and press it into place after it sets up. I have a brayer (a hard rubber roller used for laminating) that I like to use to go over all parts of the pad, making sure it's stuck on well. Leave it in the vertical position for an hour or so, then you're done!