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Historians sometimes like to separate out good Nazis from bad Nazis, but they always forget those Nazis like Hugo Reiss—the ones who are just sort of there. Hugo Reiss is one of the two big Nazis in the book, along with Bruno Kreuz vom Meere. And it's both easy to confuse the two of them (especially since "Bruno Kreuz vom Meere" is enough of a name for two people) and easy to tell them apart since they're "foils." For instance, Reiss is the official consul for the Reich in San Francisco and he has some complex feelings about Nazism; by contrast, Kreuz vom Meere is the head of the German secret police and seems pretty happy with Nazism.
How is Reiss conflicted about Nazism? For one thing, Hugo Reiss is reading The Grasshopper Lies Heavy, even though it's illegal in German territories because it's an anti-Nazi book. And he's not just reading it to give it a bad review on Amazon; he actually likes part of it. Or rather, he reacts like a typical Nazi at times, like "Alex Lotze" would: Reiss wonders if Abendsen is secretly Jewish. Such a perfect Nazi, right?
But then he feels "sick with rage" about this unending Nazi hunt for Jews: "That Herr Hope is right, he thought. With his joke about our contact on Mars. Mars populated by Jews. We would see them there, too" (8.95-6). So even as he feels a Nazi urge to think Abendsen is a Jew, Reiss recognizes that this kind of thinking doesn't lead anywhere. Also, let's just note: not only is Reiss reading a banned book, but he listens to the banned comedian Bob Hope. Reiss may be a Nazi, but he mostly seems to just want to get on with his routine duties: "My hands are full greeting German sailors and answering coded radiograms" (8.97). '
Reiss is the only Nazi that we get a POV for; and part of the reason why Dick shows us the inside of Reiss's head (ew) might be to show Reiss's conflicted feelings about Nazism. But we also get to see how Reiss is caught up in the system too. From the outside, he looks like a powerful official. But check out his reaction when Goebbels calls him: "The blood in Reiss' veins instantly stopped its motion" (11.29). Does that sound like someone who's thrilled to be contacted by Nazi #1? As soon as Reiss gets that call, he folds to all of Goebbels' requests, because he's too weak or scared to stand up to the System. And if you think that bit about Reiss's blood sounds familiar, that's because you read something like it in Chapter 1: "And his blood stopped in his veins" (1.57). That's Frank thinking about the Nazis. So Reiss the Nazi and Frank the Jew have very similar reactions to thinking about the Nazi System or getting the attention of that System.
So, yes, Hugo Reiss is a Nazi (boo) and a bit of a coward—but Dick lets us see inside his head, which shows us that Reiss isn't the worst person in the world and feels that he can't fight the System. We still don't like him; and we think he could do more if he weren't such a coward or, you know, a Nazi.