If you've checked carefully for any new growth starting above the point shown in the bottom photo, you should cut back to the place where the new growth is emerging. With no idea where you are located, it's impossible to say what caused the death of this section of the rhododendron, but I am finding a great deal of very late growth on mine because of the harsh 2014-2015 winter and, especially, cold spring temperatures which killed leaf buds as well as flower buds, Whether this late growth will have enough time to harden off before cold temperatures return is an open question. This is true of the type of growth shown in your second photo. Hope for a long, gradually cooling fall.

Dieback can often be attributed to summer or winter drought. We have had both summer and winter drought here in PA. The winter drought was aggravated by the very long time the ground was frozen, at least 3 months. I had several plant with major branches die back last winter and this spring I had a small plant that died back to the base but is coming back. It probably was weakened last winter and this spring the reoccurring periods of drought with high temperatures finished the stem off.

When a drought occurs you can quickly see which plants have good root structures and which are just marginal. When the top of the plant outgrows the root system, the plant becomes more susceptible to drought dieback.

I think the branch dying did you a favor. It was just about to have a conflict with the pine branch just above it. I'd remove the whole branch right down where it begins, rather than leaving a stub that will sprout a lot of new growth way down under the rest of the plant. The overall effect will be much more pleasing. I would have removed it even if it didn't die.

Mike