Yes you can hike and camp, there are alot of good trails,here's a site that you can use to plan a hiking trip,
http://www.trails.com/stateactivity.aspx . For camping you need a permit and the only campsites I know of in Loyalsock is up Rock Run and you need to contact the DCNR-Bureau of Forestry for a permit,That's if you want to camp on state land, I know there's a privately owned site in Marsh Hill about 7 miles north of Trout Run on Rt.14 which is only a few miles south of Ralston/Rock Run.