You meet a friend while walking on the street, and he/she gives you a hug.

Incontri un amico/un'amica per strada, ti abbraccia.

hug them back harder

I find this acceptable.

i hug back, and ask how he/she is doing.

I would be very happy

I would greet them and ask them how everything was going.

I would hug back.

I would return the hug and see how their day was going.

Unless I hadn't seen that friend in a while, I would find that pretty strange.

lo abbraccio

Lo abbraccio anch'io.

lo/la abbraccio anche io

Ne sono felice.

ricambio,sorrido e inizio a parlarci.

se lo conosco bene ricambio,sennò faccio capire che forse sta esagerando