If I were doing it, I'd measure a little less than 4 ounces of water and start with a couple tablespoons of the powder and see what the consistency looks like after soaking for a few minutes. It also depends on what the recipe is for. You might not need to rehydrate by itself if there is liquid in the recipe already. Then, you could use the chile powder as a spice and add it to taste. It will thicken the recipe without some additional water or other liquid. If it's a canning recipe, then I'd probably not try figuring out how to use the powder as a substitute. But for a soup or sauce, it probably isn't as important to be exact. Start small and add gradually. You can always add, but it's hard to subtract.