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Instances work correctly in H16.0.626 onward.
Houdini instances work with RenderMan. Simply create an Instance SOP as you would normally create Houdini instances.
In the Instance node, set your Instance object and select Fast point instancing. This will emit RenderMan ObjectInstance. Note that if you select Full point instancing or Off for Point instancing, it will not create instances but copies of the object instead.
To override material for the instanced objects, we can use the Material SOP inside the Instance.
Here is an example hip file that shows how to override Bxdf and color variation using the Material SOP.
