Fearing's Farm Nursery

Most rhododendrons like a part shady, part sunny, location with rich organic soil which is well drained, but doesn't get too dry, and is somewhat on the acid side. Thus the initial choice of site and planting is important for the rhododendron's future health.
In general, smaller leaved rhododendrons can take more sun than larger leaved ones. However most rhododendrons are pretty flexible. I have identical varieties planted on the north side of our woods where they get lots of light but no direct sunlight and planted on the south side where they are in full sun most of the day, and both do fine. However they will struggle at the extremes, e.g. planted under the eaves, against the south side of a white house, or deep in a cedar woods.
A rhododendron in too much sun will usually tell you that by showing yellow leaves facing the sun (but green leaves in the interior of the plant where they are shaded). One in too much shade will tend to be leggy and will not bloom well.
Rhododendrons usually cannot be pruned to control the size with any success, so one should consider carefully the eventual size of the plant when deciding where to plant.

I start by digging a hole 3-4 times as wide as the pot and at least twice as deep. That is easy for a one or two gallon pot, but may be unrealistic if you are transplanting an 8 foot high plant.
I then mix in maybe 50% organic matter. I use partially rotted bark mulch, but compost, peat moss, or rotted leaves would be ok. The bark mulch takes longer to break down than things like compost, so is perhaps preferable for the initial planting. The aim is to have a fluffy, aerated soil with lots of organic matter.
I then usually position the root ball half above the original ground level. Our garden in Abbotsford has very clayey soil, which doesn't drain well, so by planting above ground level and originally digging fairly deep, I hope to ensure good drainage. That wasn't really necessary in Vancouver where our garden was on sand.
Then I mound the dirt up over and around the root ball, preserving the original soil level at the root ball, but mounding the dirt up a bit outside the drip line. This provides a shallow basin for a year or two until the dirt settles, which makes it easier to water the plant until it is established. The whole mound is then covered with an inch or so of bark mulch.
I do not put fertilizer (other than the organic material) in the hole or soil at the time of planting, but would use a surface application of rhododendron and azalea fertilizer in the spring as for more established plants.

If your soil is well drained, planting above the existing ground level is unnecessary. In that case put the top of the root ball slightly above ground level so that when the dirt settles it will be level with the existing ground level. It is still useful to mound the dirt up a bit at or outside the dripline to give a shallow basin for watering for the first year.
I use fir-hemlock bark mulch as an organic additive and mulch because that is what is easily available and cheap in our part of the country. Almost any organic matter, compost, pine needles, etc. will work. Be careful about fresh manures, which can be alkaline and/or can burn the foliage.

Rhododendron roots spread out to the dripline, but are generally very shallow, without a taproot. Thus it is possible, and in fact relatively easy, to transplant fairly large rhododendrons.
Start by clearing off the surface debris around the plant and making a vertical cut in the soil about at the dripline. One can do this with a shovel, though I have found that using an old pruning saw works better. The saw cuts the roots rather than pulling or tearing them and disturbs the root ball less than when this cut is made with a shovel. For smaller or medium size plants this is often enough and one can then lever the whole root ball out with a shovel.
For large plants one usually has to dig a trench around the plant outside the initial cut and dig out underneath the rootball. Even for large plants the rootball is rarely more than 12-18 inches deep. One can then lever up one side of the rootball with 2x4's, slide a tarp under, lever the other side up and pull the tarp out and then drag the plant with its root ball out using the tarp.
The plant can then be moved to its new location and planted just like a new plant.