Generalized censoring, combined with a power-based distribution, improves inferential efficiency by capturing more detailed failure-time information in complex testing scenarios. Conventional censoring schemes may discard substantial failure-time information, leading to inefficiencies in parameter estimation and reliability prediction. To address this limitation, we develop a comprehensive inferential framework for the alpha-power Weibull (APW) distribution under a generalized progressive hybrid Type-II censoring scheme, a flexible design that unifies classical, hybrid, and progressive censoring while guaranteeing test completion within preassigned limits. Both maximum likelihood and Bayesian estimation procedures are derived for the model parameters, reliability function, and hazard rate. Associated uncertainty quantification is provided through asymptotic confidence intervals (normal and log-normal approximations) and Bayesian credible intervals obtained via Markov chain Monte Carlo (MCMC) methods with independent gamma priors. In addition, we propose optimal censoring designs based on trace, determinant, and quantile-variance criteria to maximize inferential efficiency at the design stage. Extensive Monte Carlo simulations, assessed using four precision measures, demonstrate that the Bayesian MCMC estimators consistently outperform their frequentist counterparts in terms of bias, mean squared error, robustness, and interval coverage across a wide range of censoring levels and prior settings. Finally, the proposed methodology is validated using real-life datasets from engineering (electronic devices), clinical (organ transplant), and physical (rare metals) studies, demonstrating the APW model’s superior goodness-of-fit, reliability prediction, and inferential stability. Overall, this study demonstrates that combining generalized censoring with the APW distribution substantially enhances inferential efficiency and predictive performance, offering a robust and versatile tool for complex life-testing experiments across multiple scientific domains.