My opponent casts shatter on my lucky charm, I then play hydra spell to shatter his bag of holding, if he casts reflection, can he then shatter another of my items instead of me shattering one of his? I'm inclined to think I'd be out two items in this situation, but some in our group are undecided
Hydra Spell says to treat the Spell as it was cast individually on each Character, ignoring time and Region restrictions. An interesting question arises: who's the caster of the Spell targeted by Hydra? Hydra Spell doesn't say that the caster changes, so the caster remains the same and this means that who casts Hydra Spell doesn't get to choose how to resolve Spell duplications.
Casting Hydra Spell on Shatter doesn't allow you to choose how to resolve the Spell on other characters. The caster decides. Your opponent must discard an Object of HIS choice, not YOURS. He's still the caster of Shatter Spell.
If this is not enough to restrain your opponent from casting Reflection, he should realize that he can't do that. Hydra Spell cannot be reflected because it targets nothing (or it targets a Spell, if we make an approximation), it cannot target a Character. No point in using Reflection on Shatter, because he's already the caster.
Also, if I do shatter his bag of holding, does he have any window of opportunity to move items around? What if I take his bag with tricks or treats? Can he empty the bag before I take it?
You're quite stubborn with this Bag of Holding question. You asked it at least twice in other posts and I answered you that the current FAQ already covers this issue. A character that loses the Bag must ditch any Objects that he can't carry on the space. He chooses what to keep and what to ditch. No one takes/destroys a Bag AND takes/destroys the Objects inside, at least not in 4th edition Rev.